**CHAPTER 43-02-03**  **OIL AND**  **GAS CONSER**  **V A**  **TION** Section 43-02-03-01 Denitions 43-02-03-02 Scope of Chapter 43-02-03-03 Promulgation of Rules, Regulations, or Orders [Repealed] 43-02-03-04 Emergency Rule, Regulation, or Order [Repealed] 43-02-03-05 Enforcement of Laws, Rules, and Regulations Dealing With Conservation of Oil and Gas 43-02-03-06 Waste Prohibited 43-02-03-07 United States Government Leases 43-02-03-08 Classifying and Dening Pools [Repealed] 43-02-03-09 Forms Upon Request 43-02-03-10 Authority to Cooperate With OtherAgencies 43-02-03-11 Organization Reports 43-02-03-12 Reservoir Surveys 43-02-03-13 Record of Wells 43-02-03-14 Access to Records 43-02-03-14.1 V erication of Certied Welders [Repealed] 43-02-03-14.2 Oil and Gas Metering Systems 43-02-03-15 Bond and Transfer ofWells 43-02-03-16 Application for Permit to Drill and Recomplete 43-02-03-16.1 Designation and Responsibilities of Operator 43-02-03-16.2 Revocation and Limitation of Drilling Permits 43-02-03-16.3 Recovery of a Risk Penalty 43-02-03-17 Sign on Well 43-02-03-18 Drilling Units

- Well Locations 43-02-03-18.1 Exception Location 43-02-03-19 Site Construction 43-02-03-19.1 Fencing, Screening, and Netting of Drilling and Reserve Pits 43-02-03-19.2 Disposal ofWaste Material 43-02-03-19.3 Earthen Pits and Open Receptacles 43-02-03-19.4 Drilling Pits 43-02-03-19.5 Reserved PitforDrilling Mud and Drill Cuttings From Shallow Wells 43-02-03-20 Sealing Of f Strata 43-02-03-21 Casing, Tubing, and Cementing Requirements 43-02-03-22 Defective Casing or Cementing 43-02-03-23 Blowout Prevention 43-02-03-24 Pulling String of Casing 43-02-03-25 Deviation T ests and Directional Surveys 43-02-03-26 Multiple Zone Completions 43-02-03-27 Perforating, Fracturing, and Chemically Treating Wells 43-02-03-27.1 Hydraulic Fracture Stimulation 43-02-03-28 Safety Regulation 43-02-03-29 Well and Lease Equipment 43-02-03-30 Notication of Fires, Leaks, Spills, or Blowouts 43-02-03-30.1 Leak and Spill Cleanup 1 4/201243-02-03-31 Well Log, Completion, and Workover Reports 43-02-03-32 Stratigraphic T est or Core Holes 43-02-03-33 Notice of Intention to Plug Well 43-02-03-34 Method of Plugging 43-02-03-34.1 Reclamation of Surface 43-02-03-35 Conversion of Mineral Wells to FreshwaterWells 43-02-03-36 Liability 43-02-03-37 Slush Pits [Repealed] 43-02-03-38 Preservation of Cores and Samples [Repealed] 43-02-03-38.1 Preservation of Cores and Samples 43-02-03-39 Limiting Gas-Oil Ratio 43-02-03-39.1 Oil Production Limitation 43-02-03-40 Gas-Oil Ratio T est 43-02-03-41 Subsurface Pressure T ests 43-02-03-42 Commingling of Oil From Pools 43-02-03-43 Control of Multiply Completed Wells [Repealed] 43-02-03-44 Metered Casinghead Gas 43-02-03-45 V ented Casinghead Gas 43-02-03-46 Use ofV acuum Pumps [Repealed] 43-02-03-47 Produced Water 43-02-03-48 Measurement of Oil 43-02-03-48.1 Central Production Facility

- Commingling of Production 43-02-03-49 Oil Production Equipment, Dikes, and Seals 43-02-03-50 T ank Cleaning Permit 43-02-03-51 Treating Plant 43-02-03-52 Report of Oil Production 43-02-03-52.1 Report of Gas Produced in Association With Oil 43-02-03-53 Saltwater Handling Facilities 43-02-03-54 Investigative Powers 43-02-03-55 Abandonment ofWells

- Suspension of Drilling 43-02-03-56 Underground Disposal ofWater [Repealed] 43-02-03-57 Determination of Gas Well Potential 43-02-03-58 Method and Time ofShut-In Pressure T ests [Repealed] 43-02-03-59 Production From Gas Wells to Be Measured and Reported 43-02-03-60 Natural Gas Utilization [Repealed] 43-02-03-60.1 V aluation of Flared Gas 43-02-03-60.2 Flaring Exemption 43-02-03-61 Storage Gas 43-02-03-62 Carbon Dioxide, Coal Bed Methane, Helium, and Nitrogen 43-02-03-63 Regulation of Pools 43-02-03-64 Rate of Producing Wells 43-02-03-65 Authorization for Production, Purchase, and Transportation 43-02-03-66 Application forAllowable on New Oil Wells 43-02-03-67 Oil Proration 43-02-03-68 Gas-Oil Ratio Limitation 43-02-03-69 Allocation of Gas Production 43-02-03-70 Gas Proration Period 43-02-03-71 Adjustment of Gas Allowables 43-02-03-72 Gas Proration Units 4/2012 243-02-03-73 Permitfor Injection ofGas, Air, orWater [Repealed] 43-02-03-74 Casing and Cementing of Injection Wells [Repealed] 43-02-03-75 Notice of Commencement and Discontinuance of Injection Operations [Repealed] 43-02-03-76 Records [Repealed] 43-02-03-77 Application for Unitized Management Under Commission Order 43-02-03-78 Illegal Sale Prohibited [Repealed] 43-02-03-79 Purchase of Liquids From Gas Wells 43-02-03-80 Reports of Purchasers and Transporters ofCrude Oil 43-02-03-81 Authorization to Transport Oil From a Well or Central Production Facility 43-02-03-81.1 ReportsofPurchasesforResaleandTransportingofDryGas 43-02-03-82 Renery Reports 43-02-03-83 Gas Processing Plant Reports 43-02-03-84 Additional Information May Be Required 43-02-03-85 Books and Records to Be Kept to Substantiate Reports 43-02-03-86 Public Hearing Required [Repealed] 43-02-03-87 Institute Proceedings [Repealed] 43-02-03-88 Application for Hearing 43-02-03-88.1 Special Procedures for Increased Density Wells, Pooling, Flaring Exemption, Underground Injection, Commingling, Converting MineralWellsto FreshwaterWells, and Central T ank Battery or Central Production Facilities Applications 43-02-03-88.2 Hearing Participants by T elephone 43-02-03-89 Upon Application Hearing Is Set [Repealed] 43-02-03-90 Hearings

-ComplaintProceedings

- EmergencyProceedings

- Other Proceedings 43-02-03-90.1 Investigatory Hearings 43-02-03-90.2 Of cial Record 43-02-03-90.3 Petitions for Review of Recommended Order and Oral Arguments Prohibited 43-02-03-90.4 Notice of Order by Mail 43-02-03-90.5 Service and Filing 43-02-03-91 Rehearing [Repealed] 43-02-03-92 Burden of Proof [Repealed] 43-02-03-93 Designation of Examiners 43-02-03-94 Matters to Be Heard by Examiner [Repealed] 43-02-03-95 Powers and Duties of Examiner 43-02-03-96 Matters Heard by Commission [Repealed] 43-02-03-97 Examiner Disinterested Umpire [Repealed] 43-02-03-98 Report of Examiner 43-02-03-99 Commission Order From Examiner Hearing 43-02-03-100 Hearing De Novo Before Commission [Repealed] 43-02-03-101 Prehearing Motion Practice **43-02-03-01. Denitions.**  Theterms used throughoutthis chapterhavethe same meaning as in North Dakota Century Code chapter 38-08 except:

3 4/20121. "Adjusted allowable" means the allowable production a proration unit receives after all adjustments are applied. 2. "Allocated pool" is one in which the total oil or natural gas production is restricted and allocated tovarious proration unitstherein in accordance with proration schedules. 3. "Allowable production" means that numberofbarrels ofoil orcubicfeet of natural gas authorized to be produced from the respective proration units in an allocated pool. 4. "Barrel" meansforty-two United Statesgallons [158.99 liters] measured at sixty degrees Fahrenheit [15.56 degrees Celsius] and fourteen and seventy-three hundredths pounds per square inch absolute [1034.19 grams per square centimeter]. 5. "Barrel ofoil" meansforty-two United States gallons [158.99 liters] ofoil afterdeductions forthe full amount ofbasic sediment, water, and other impurities present, ascertained by centrifugal or other recognized and customary test. 6. "Bottom holeorsubsurfacepressure"meansthepressurein poundsper square inch gauge under conditions existing at or near the producing horizon.
7. "Bradenhead gas well" means any well capable of producing gas through wellhead connections from a gas reservoir which has been successfully cased of ffrom an underlying oil orgas reservoir

. 8. "Casinghead gas" means any gas or vapor, or both gas and vapor, indigenous to and produced from a pool classied as an oil pool bythe commission. 9. "Certied or registered mail" means any form of service by the United States postal service, federal express, Pitney Bowes, and any other commercial, nationwide delivery service that provides the mailerwith a document showing the date ofdelivery or refusal to accept delivery

. 10. "Common purchaser for natural gas" means any person now or hereafter engaged in purchasing, from one or more producers, gas produced from gas wells within each common source of supply from which it purchases, for processing or resale. 11. "Common purchaser for oil" means every person now engaged or hereafterengaging in the business of purchasing oil in this state. 12. "Common source ofsupply" is synonymouswith pool and is a common accumulation ofoil orgas, or both, as dened by commission orders.

4/2012 413. "Completion" means an oil well shall be considered completed when the rstoil is produced through wellhead equipment into tanksfrom the ultimateproducing intervalaftercasing hasbeen run. Agaswellshall be considered completewhen thewell iscapableofproducing gasthrough wellhead equipmentfrom the ultimate producing zone after casing has been run. A dry hole shall be considered complete when all provisions of plugging are complied with as set out in this chapter

. 14. "Condensate" means the liquid hydrocarbons recovered at the surface that result from condensation due to reduced pressure or temperature ofpetroleum hydrocarbonsexisting in agaseous phase in the reservoir

. 15. "Cubic foot of gas" means that volume of gas contained in one cubic foot [28.32 liters] ofspace and computed at a pressure offourteen and seventy-three hundredths pounds per square inch absolute [1034.19 grams per square centimeter] at a base temperature of sixty degrees Fahrenheit [15.56 degrees Celsius]. 16. "Director" meansthedirectorofoil and gasofthe industrial commission, the assistant director of oil and gas of the industrial commission, and their designated representatives. 17. "Enhanced recovery" means the increased recovery from a pool achieved by articial means or by the application of energy extrinsic to the pool, which articial means or application includes pressuring, cycling, pressure maintenance, or injection to the pool of a substance or form of energy but does not include the injection in a well of a substance orform ofenergy forthe sole purpose of:

a. Aiding in the lifting ofuids in the well; or b. Stimulation of the reservoir at or near the well by mechanical, chemical, thermal, or explosive means. 18. "Exception well location" means a location which does not conform to the general spacing requirements established by the rules or orders of the commission but which has been specically approved by the commission. 19. "Gas lift" means any method of lifting liquid to the surface by injecting gas into a well from which oil production is obtained. 20. "Gas-oil ratio" means the ratio of the gas produced in cubic feet to a barrel ofoil concurrently produced during any stated period. 21. "Gas-oil ratio adjustment" means the reduction in allowable of a high gas-oil ratio proration unit to conform with the production permitted by the limiting gas-oil ratio for the particular pool during a particular proration period. 5 4/201222. "Gas transportation facility" means a pipeline in operation serving one or more gas wells for the transportation of natural gas, or some other device or equipment in like operation whereby natural gas produced from gas wells connected therewith can be transported. 23. "Gas well" means a well producing gas or natural gas from a common source ofgas supply as determined by the commission. 24. "Highgas-oil ratioproration unit"meansaproration unitwithaproducing oil well with a gas-oil ratio in excess ofthe limiting gas-oil ratio for the pool. 25. "Injection orinputwell" means anywell used forthe injection ofair, gas, water, or otheruids into any underground stratum. 26. "Limiting gas-oil ratio" means the gas-oil ratio assigned by the commission to a particular oil pool to limit the volumes of casinghead gas which may be produced from the various oil-producing units within that particular pool. 27. "Log or well log" means a systematic, detailed, and correct record of formations encountered in the drilling of a well, including commercial electric logs, radioactive logs, dip meter logs, and other related logs. 28. "Multiple completion" means the completion ofanywell so as to permit the production from more than one common source ofsupply

. 29. "Natural gas or gas" means and includes all natural gas and all other uid hydrocarbons not herein dened as oil. 30. "Occupied dwelling" or "permanently occupied dwelling" means a residence which is lived in by a person at least six months throughout a calendar year

. 31. "Of cial gas-oil ratio test" means the periodic gas-oil ratio test made by order of the commission and by such method and means and in such manner as prescribed by the commission. 32. "Of fset" means a well drilled on a forty-acre [16.19-hectare] tract cornering or contiguous to a forty-acre [16.19-hectare] tract having an existing oil well, or a well drilled on a one hundred sixty-acre [64.75-hectare] tract cornering or contiguous to a one hundred sixty-acre [64.75-hectare] tract having an existing gas well; provided, however, that for wells subject to a eldwide spacing order, "of fset" means any wells located on spacing units cornering or contiguous to the spacing unit orwell which is the subject ofan inquiry ora hearing. 33. "Oilwell" meansanywell capableofproducing oil oroil and casinghead gasfrom acommon sourceofsupplyasdetermined bythecommission. 4/2012 634. "Operator" is the principal on the bond covering awell and such person shall be responsible for drilling, completion, and operation of the well, including plugging and reclamation ofthe well site. 35. "Overage oroverproduction" means the amount ofoil orthe amount of natural gas produced during a proration period in excess ofthe amount authorized on the proration schedule. 36. "Potential" meansthe properlydetermined capacityofawell to produce oil, orgas, or both, underconditions prescribed by the commission. 37. "Pressure maintenance" means the injection of gas or other uid into a reservoir, eitherto increase or maintain the existing pressure in such reservoirorto retard the natural decline in the reservoir pressure. 38. "Proration day" consists of twenty-four consecutive hours which shall begin at seven a.m. and end at seven a.m. on the following day

. 39. "Proration month" means the calendar month which shall begin at seven a.m. on the rst day of such month and end at seven a.m. on the rst day ofthe next succeeding month. 40. "Proration schedule" means the periodic order of the commission authorizing the production, purchase, and transportation of oil or of natural gas from the various units of oil or of natural gas proration in allocated pools. 41. "Proration unit for gas" consists of such geographical area as may be prescribed by special pool rules issued by the commission. 42. "Recomplete" means the subsequent completion ofa well in a dif ferent pool. 43. "Reservoir" means pool or common source ofsupply

. 44. "Saltwater handling facility" means and includes any container such as a pit, tank, or pool, whether covered or uncovered, used for the handling, storage, disposalofdeleterioussubstancesobtained, orused, in connection with the drilling or operation ofwells. 45. "Shut-in pressure" means the pressure noted atthe wellhead when the well iscompletelyshutin, notto beconfusedwith bottom hole pressure. 46. "Spacing unit" is the area in each pool which is assigned to a well for drilling, producing, and proration purposes in accordance with the commission’s rules or orders. 47. "Stratigraphic testwell" means anywell or hole, except a seismograph shot hole, drilled forthe purpose ofgathering information in connection
7 4/2012with the oil and gas industry with no intent to produce oil or gas from such well. 48. "T ank bottoms" means that accumulation of hydrocarbon material and other substances which settle naturally below crude oil in tanks and receptacles that are used in handling and storing of crude oil, and which accumulation contains basic sediment and water in an amount rendering it unsalable to an ordinarycrude oil purchaser; provided, that with respect to lease production and for lease storage tanks, a tank bottom shall be limited tothatvolume ofthetankinwhich it is contained that lies below the bottom ofthe pipeline outlet thereto. 49. "Treating plant" means any plant permanently constructed or portable used for the purpose of wholly or partially reclaiming, treating, processing, or in any manner making tank bottoms or any otherwaste oils marketable. **History:** Amended ef fective January 1, 1983; May 1, 1992; July 1, 1996; December 1, 1996; September 1, 2000; July 1, 2002; January 1, 2008. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-02. Scope**  **of chapter** 

**.** This chapter contains general rules of statewide application which have been adopted by the industrial commission to conserve the natural resources of North Dakota, to prevent waste, and to provide foroperation inamannerastoprotectcorrelativerightsofallownersofcrudeoiland natural gas. Special rules, pool rules, eld rules, and regulations and orders have been and will be issued when required and shall prevail as against general rules, regulations, and orders if in conict therewith. However, wherever this chapter does notconictwith special rules heretoforeorhereafteradopted, this chapterwill apply in each case. The commission may grant exceptions to this chapter, after due notice and hearing, when such exceptionswill result in the prevention ofwaste and operate in a mannerto protect correlative rights. **History:** Amended ef fective May 1, 1992. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-03. Promulgation**  **of rules,**  **regulations, or**  **orders.** Repealed ef fective January 1, 1983. **43-02-03-04. Emergency**  **rule, regulation,**  **or order** 

**.** Repealed ef fective January 1, 1983. **43-02-03-05. Enforcement**  **of laws,**  **rules, and**  **regulations dealing**  **with conservation**  **of oil**  **and gas.**  The commission, its agents, representatives, and employees are charged with the duty and obligation of enforcing all rules and statutes of North Dakota relating to the conservation of oil and gas. However,

4/2012 8it shall be the responsibility of all the owners or operators to obtain information pertaining to the regulation ofoil and gas before operations have begun. **History:** Amended ef fective May 1, 2004; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-06. W** **aste prohibited.**  All operators, contractors, drillers, carriers, gas distributors, service companies, pipe pulling and salvaging contractors, or other persons shall at all times conduct their operations in the drilling, equipping, operating, producing, plugging, and site reclamation of oil and gas wells in a manner that will prevent waste. **History:** Amended ef fective January 1, 1983; May 1, 1992. **General Authority:**  NDCC 38-08-03 **Law Implemented:**  NDCC 38-08-03 **43-02-03-07. United**  **States government**  **leases.** The commission recognizes that all persons drilling and producing on United States government land shall comply with the United States government regulations. Such persons shall also comply with all applicable state rules and regulations. Copies of the sundry notices, reports on wells, and well data required bythis chapterofthewells on United States government land shall be furnished to the commission at no expense to the commission. Federal forms may be used when ling such notices and reports except for reporting the plugging and abandonment ofa well. In such instance, the plugging record (form 7) must be led with the commission. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1994. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-08. Classifying**  **and dening**  **pools.** Repealed ef fective January 1, 1983. **43-02-03-09. Forms**  **upon request.**  Forms for written notices, requests, and reports required by the commission will be furnished upon request. These forms shall be ofsuch nature as prescribed by the commission to cover proposed work and to report the results of completed work. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-10. Authority**  **to cooperate**  **with other**  **agencies.** The commission may from time to time enter into arrangements with state and federal governmentagencies, industry committees, and individualswith respectto special projects, services, and studies relating to conservation ofoil and gas. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04
9 4/2012**43-02-03-1 1.**  **Organization reports.**  Every person acting as principal or agent for another or independently engaged in the drilling ofoil or gas wells, or in the production, storage, transportation, rening, reclaiming, treating, marketing, or processing ofcrudeoil ornatural gas in North Dakotashall immediatelylewith the directorthe name underwhich such business is being conducted oroperated; and name and post-of ce address ofsuch person, the business orbusinesses in which the person is engaged; the plan oforganization, and in case of a corporation, the law under which it is chartered; and the names and post-of ce addresses of any person acting as trustee, together with the names and post-of ce addresses of any of cials thereof on an organization report (form 2). In each case where such business is conducted under an assumed name, such organization report shall show the names and post-of ce addresses of all owners in addition to the other information required. A new organization report shall be led when and ifthere is a change in any ofthe information contained in the original report. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-12. Reservoir**  **surveys.** By special order of the commission, periodicsurveys may be made ofthe reservoirs in this state containing oil and gas. These surveys will be thorough and complete and shall be made using methods approved bythedirector

. The condition ofthe reservoirs containing oil and gasand the practices and methods employed by the operators shall be investigated. The produced volume and source ofcrude oil and natural gas, the reservoirpressure of the reservoirasan average, theareasofregional ordif ferential pressure, stabilized gas-oil ratios, and the producing characteristics of the eld as a whole and the individual wells within the eld shall be specically included. All operators of oil wells are required to permit and assist the agents of the commission in making any and all special tests that may be required by the commission on any or all wells. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-13. Record** **of wells.**  Thedirectorshall maintainarecordofof cial well names, to be known as the well-name register, in which shall be entered: (1) the name and location of each well; (2) the well le number; (3) the name of the operator, ortheoperator’sagent; and (4)anysubsequentnameornamesassigned to the well and approved by the director

. Thelastnameassignedtoawell inthewell-nameregistershall betheof cial name ofthe well, and the one bywhich it shall be known and referred to.

4/2012 10The director may, at the director’s discretion, grant or refuse an application to change the of cial name. The application shall be accompanied by a fee of twenty-ve dollars, which fee is established to coverthe expense of recording the change. Ifthe application is refused, the fee shall be refunded. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-14. Access**  **to records.**  The commission, director, and their representatives shall have accessto all well recordswhereverlocated. All owners, operators, drilling contractors, drillers, service companies, or other persons engaged in drilling, completing, producing, or servicing wells shall permit the commission, director, and their representatives to come upon any lease, property, well, or drilling rig operated or controlled by them, complying with state safety rules, and to inspect the records and operation ofsuch wells, and to have access at all times to any and all records of wells. If requested, copies of such records must be led with the commission. The condentialityofanydata submitted which is condential pursuant to subsection 6 of North Dakota Century Code section 38-08-04 and section 43-02-03-31 must be maintained. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; May 1, 1994. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-14.1. V**  **erication of**  **certied welders.**  Repealed ef fective July 1, 1996. **43-02-03-14.2. Oil**  **and gas**  **metering systems.**  1. **Application of**  **section.** This section is applicable to all metering stations measuring production from oil and gaswellswithin the state of North Dakota, including private, state, and federal wells. Ifthese rules dif fer from federal requirements on measurement of production from federal oil and gas wells, the federal rules take precedence. 2. **Denitions.** As used in this section:

a. "Allocation meter" means a meter used by the producer to determine the volume from an individual well before it is commingled with production from one or more other wells prior to the custody transfer point. b. "Calibration test" means the process or procedure of adjusting an instrument, such as a gas meter, so its indication or registration is in satisfactorily close agreementwith a reference standard.

11 4/2012c. "Custodytransfermeter" means a meterused to transferoil orgas from the producerto transporter or purchaser

. d. "Gas gathering meter" means a meter used in the custodytransfer of gas into a gathering system.

e. "Meterfactor" meansa numberobtained bydividingthe netvolume ofuid (liquid orgaseous) passed throughthe meterduring proving by the net volume registered by the meter

. f. "Metering proving" means the procedure required to determine the relationship between the true volume ofa uid (liquid or gaseous) measured by a meterand the volume indicated by the meter

. 3. **Inventory ling**  **requirements.** The owner of metering equipment shall le with the commission an inventory of all meters used for custody transfer and allocation of production from oil or gas wells, or both. Inventories must be updated on an annual basis, and led with the commission on or before the rst day of each year, or they may be updated as frequently as monthly, at the discretion ofthe operator

. Inventories must include the following:

a. Well name and legal description of location or meter location if dif ferent. b. North Dakota industrial commission well le number

.
c. Meter information: (1) Gas meters: (a) Make and model. (b) Dif ferential, static, and temperature range. (c) Orice tube size (diameter). (d) Meter station number

. (2) Oil meters: (a) Make and model. (b) Size. (c) Meter station number

. 4. **Installation and**  **removal of** **meters.** The commission mustbe notied of all custody transfer meters placed in service. The owner of the 4/2012 12custody transfer equipment shall notify the commission of the date a meter is placed in service, the make and model of the meter, and the meter or station number

. The commission must also be notied of all metering installations removed from service. The notice must include the date the meter is removed from service and the meter or station number

. The required notices must be led with the commission within thirty days ofthe installation or removal ofa meter

. All allocation meters mustbeapproved priorto installation and use. The application for approval must be on a sundry notice (form 4) and shall include the make and model number ofthe meter, the meter or station number, thewell name, itslocation, andthedatethemeterwill beplaced in service. Meter installations for measuring production from oil or gas wells, or both, must be constructed toAmerican petroleum institute orAmerican gas association standards or to meter manufacturer’s recommended installation. Meter installations constructed in accordance with American petroleum institute orAmerican gas association standards in ef fect at the time of installation shall not automatically be required to retrotifstandardsare revised. Thecommissionwill reviewanyrevised standards, and when deemed necessary will amend the requirements accordingly

. 5. **Registration of**  **persons proving**  **or testing**  **meters.** All persons engaged in meter proving or testing of oil and gas meters must be registered with the commission. Those persons involved in oil meter testing, by owing uid through the meter into a test tank and then gaugingthetank, areexemptedfromtheregistration process. However, such persons must notify the commission prior to commencement of the test to allow a representative of the commission to witness the testing process. Areportofthe resultsofsuch testshall beledwith the commission within thirty days after the test is completed. Registration must include the following:

a. Name and address of company

. b. Name and address of measurement personnel.

c. Qualications, listing experience or specic training. Any meter tests performed by a person not registered with the commission will not be accepted as a valid test. 6. **Calibration requirements.**  Oil and gas metering equipment must be proved or tested to American petroleum institute or American gas association standards or to the meter manufacturer’s recommended procedure to establish a meter factor or to ensure measurement accuracy

. The owner of a custody transfer meter or allocation meter 13 4/2012shall notify the commission at least ten days prior to the testing ofany meter

.
a. Oil allocation meterfactors shall be maintained within two percent of original meter factor

. If the factor change between provings or tests is greater than two percent, the meter must be repaired or adjusted and tested within forty-eight hours of repairor replaced. b. Copiesofall oil allocation metertestprocedures areto beled with and reviewed bythecommissiontoensuremeasurementaccuracy

.
c. All gas meters must be tested with a minimum ofa three-pointtest forstaticand dif ferential pressure elements and atwo-pointtestfor temperature elements. The test reports must include an as-found and as-left test and a detailed report ofchanges. d. T est reports must include the following: (1) Producer name. (2) Lease name. (3) Pipeline company or company name oftest contractor

. (4) T est personnel’s name. (5) Station or meter number

.
e. Unless required more often by the director, minimum frequency of meter proving or calibration tests are as follows: (1) Oil meters used forcustodytransfershall be proved monthly forall measured volumeswhich exceed twothousand barrels per month. For volumes two thousand barrels or less per month, meters shall be proved at each two thousand barrel interval or more frequently atthe discretion ofthe operator

. (2) Quarterlyforoil meters used forallocation of production. (3) Semiannually for gas meters used for allocation of production. (4) Semiannuallyforgas meters in gas gathering systems. (5) For meters measuring more than one hundred thousand cubicfeet[2831.68cubicmeters] perdayon a monthlybasis, orice plates shall be inspected semiannually, and meter tubes shall be inspected at least every ve years to ensure
4/2012 14continued conformance with the American gas association meter tube specications. (6) For meters measuring one hundred thousand cubic feet [2831.68 cubic meters] per day or less on a monthly basis, orice plates shall be inspected annually

. f. Meter test reports must be led within thirty days of completion of provingorcalibrationtestsunlessotherwiseapproved. T estreports are to be led on, but not limited to, all meters used for allocation measurementofoil orgas and all meters used in crude oil custody transfer

. g. Accuracy of all equipment used to test oil or gas meters must be traceabletothestandardsofthe national institute ofstandards and technology

. The equipment must be certied as accurate either by the manufactureroran independenttestingfacility

. Thecerticates ofaccuracy must be made available upon request. Certication of the equipment must be updated as follows: (1) Annually for all equipment used to test the pressure and dif ferential pressure elements. (2) Annuallyforall equipment used to determine temperature. (3) Biennially for all conventional pipe provers. (4) Annually for all master meters. (5) Five years forequipment used in orice tube inspection.
7. **V ariances.**  V ariances from all or part of this section may be granted by the commission on the basis of economic necessity providing the variance does not af fect measurement accuracy

. All requests for variances must be on a sundry notice (form 4). A registerofvariances requested and approved must be maintained by the commission. **History:** Ef fective May 1, 1994; amended ef fective July 1, 1996; September 1, 2000; July 1, 2002. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-15. Bond**  **and transfer**  **of wells.**  1. **Bond requirements.**  Prior to commencing drilling operations, any person who proposes to drill a well foroil, gas, or injection shall submit tothe commission, and obtain its approval, a surety bond orcash bond. 15 4/2012An alternative form of security may be approved by the commission after notice and hearing, as provided by law

. The operator of such well shall be the principal on the bond covering the well. Each surety bond shall be executed by a responsible surety company authorized to transact business in North Dakota. 2. **Bond amounts**  **and limitations.**  The bond shall be in the amount of ftythousand dollarswhen applicabletoonewell only

. Wellsdrilled toa totaldepthoflessthantwothousandfeet[609.6 meters] maybebonded in a lesser amount if approved by the director

. When the principal on the bond is drilling or operating a number of wells within the state or proposes to do so, the principal may submit a bond conditioned as provided bylaw

. Wells utilized forcommercial disposal operations must be bonded in the amount of fty thousand dollars. A blanket bond covering more than one well shall be in the amount of one hundred thousand dollars, provided the bond shall be limited to no morethan six ofthe following in aggregate:

a. Awell that is a dry hole and is not properly plugged; b. Awell that is plugged and the site is not properly reclaimed; and

c. A well that is abandoned pursuant to section 43-02-03-55 and is not properly plugged and the site is not properly reclaimed. If this aggregate ofwells is reached, all well permits, for which drilling has notcommenced, held bythe principal ofsuch bond aresuspended. No rights may be exercised under the permits until the aggregate of wellsdrops belowthe required limit, ortheoperatorlestheappropriate bond to coverthe permits, atwhich time the rights given by the drilling permits are reinstated. Awell with an approved temporary abandoned status shall have the same status as an oil, gas, or injection well. The commission may, afternoticeand hearing, require higherbond amounts thanthosereferredtointhissection. Suchadditionalamountsforbonds must be related to the economic value of the well or wells and the expected cost of plugging and well site reclamation, as determined by thecommission. Thecommission mayrefusetoaccepta bondortoadd wellstoablanketbond iftheoperatororsuretycompanyhasfailed inthe past to comply with statutes, rules, or orders relating to the operation of wells; if a civil or administrative action brought by the commission is pending against the operator or surety company; or for other good cause. 3. **Unit bond**  **requirements.** Prior to commencing unit operations, the operator of any area under unitized management shall submit to the commission, and obtain its approval, a surety bond or cash bond. An alternative form of security may be approved by the commission after notice and hearing, as provided by law

. The operator of the unit shall be the principal on the bond covering the unit. The amount ofthe bond 4/2012 16shall be specied bythe commission in the orderapproving the plan of unitization. Each surety bond shall be executed bya responsiblesurety company authorized to transact business in North Dakota. Priortotransferofa unittoa newoperator, the commission, afternotice and hearing, mayrevisethe bond amountfora unit, orin thecasewhen the unitwas notpreviouslybonded, thecommission mayrequirea bond and set a bond amount for the unit. 4. **Bond terms.**  Bonds shall be conditioned upon full compliance with North Dakota Century Code chapter38-08, and all administrative rules and orders of the commission. It shall be a plugging bond, as well as a drilling bond, and is to endure up to and including approved plugging of all oil, gas, and injection wells as well as dry holes. Approved plugging shall also include practical reclamation of the well site and appurtenances thereto. If the principal does not satisfy the bond’s conditions, then the surety shall satisfy the conditions or forfeit to the commission the face value ofthe bond. 5. **T ransfer**  **of wells**  **under bond.**  Transfer of property does not release the bond. In case oftransferofpropertyorotherinterest in thewell and the principal desires to be released from the bond covering the well, such as producers, not ready for plugging, the principal must proceed as follows:

a. The principal must notify the director, in writing, of all proposed transfers ofwells at least thirty days before the closing date ofthe transfer

. The directormay, forgood cause, waivethis requirement. The principal shall submittothe commission aform 15 reciting that a certain well, or wells, describing each well by quarter-quarter, section, township, and range, is to be transferred to a certain transferee, naming such transferee, for the purpose of ownership or operation. The date of assignment or transfer must be stated and the form signed by a party duly authorized to sign on behalf of the principal. On said transferform thetransferee shall recitethefollowing: "The transferee has read theforegoing statementand does acceptsuch transfer and does accept the responsibility of such well under the transferee’s one-well bond or, as the case may be, does accept the responsibilityofsuchwells underthetransferee’s blanketbond, said bond being tendered to or on le with the commission." Such acceptance must likewise be signed by a party authorized to sign on behalfofthe transferee and the transferee’s surety

. b. When the commission has passed upon the transfer and acceptance and accepted it under the transferee’s bond, the transferor shall be released from the responsibility of plugging 17 4/2012the well and site reclamation. If such wells include all the wells within the responsibility of the transferor’s bond, such bond will be released by the commission upon written request. Such request must be signed by an of cer ofthe transferor or a person authorized to sign for the transferor

. The director may refuse to transfer any well from a bond ifthe well is in violation ofa statute, rule, or order

.
c. Thetransferee (newoperator) ofanyoil, gas, orinjection well shall be responsible for the plugging and site reclamation of any such well. Forthat purposethetransferee shall submita new bond or, in thecaseofasuretybond, producethewritten consentofthesurety of the original or prior bond that the latter’s responsibility shall continue and attach to such well. The original or prior bond shall not be released as to the plugging and reclamation responsibility of any such transferor until the transferee shall submit to the commission an acceptable bond to cover such well. All liability on bonds shall continue until the plugging and site reclamation of such wells is completed and approved. 6. **T reating**  **plant bond.**  Prior to the commencement of operations, any person proposing to operate a treating plant must submit to the commission and obtain its approval ofa surety bond or cash bond. An alternative form of security may be approved by the commission after notice and hearing, as provided by law

. The person responsible forthe operation of the plant shall be the principal on the bond. Each surety bond shall be executed by a responsible surety company authorized to transact business in North Dakota. The amount of the bond must be as prescribed in section 43-02-03-51. It is to remain in force until the operations cease, all equipment is removed from the site, and the site and appurtenances thereto are reclaimed, or liability ofthe bond is transferred to another bond that provides the same degree ofsecurity

. If the principal does not satisfy the bond’s conditions, then the surety shall satisfy the conditions or forfeit to the commission the face value of the bond.
7. **Bond termination.**  The commission shall, in writing, advise the principal and any sureties on any bond as to whetherthe plugging and reclamation is approved. Ifapproved, liability undersuch bond may be formally terminated upon receipt of a written request by the principal. The request must be signed by an of cer of the principal or a person authorized to sign for the principal. 8. **Director ’** **s authority** 

**.** The director is vested with the power to act for the commission as to all matters within this section, except requests

4/2012 18for alternative forms of security, which may only be approved by the commission. **History:** Amendedef fectiveApril30, 1981; March 1, 1982; January 1, 1983; May 1, 1990; May 1, 1992; May 1, 1994; July 1, 1996; December 1, 1996; September 1, 2000; July 1, 2002; May 1, 2004; January 1, 2006; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-16. Application**  **for permit**  **to drill**  **and recomplete.**  Before any person shall begin any well-site preparation for the drilling of any well other than surveyingandstaking, such personshallleanapplicationforpermittodrill (form 1) with the director, togetherwith a permitfee ofone hundred dollars. V erbal approval may be given forsite preparation bythe director in extenuating circumstances. No drilling activity shall commence until such application is approved and a permit to drill is issued by the director

. The application must be accompanied by the bond pursuant to section 43-02-03-15 or the applicant must have previously led such bond with the commission, otherwise the application is incomplete. An incomplete application received by the commission has no standing and will not be deemed led until it is completed. The application for permit to drill shall be accompanied by an accurate plat certied by a registered surveyor showing the location of the proposed well with reference to true north and the nearest lines of a governmental section. The plat shall also include latitude and longitude of the proposed well location to the nearest tenth of a second. Information to be included in such application shall be the proposed depth to which the well will be drilled, estimated depth to the top of important markers, estimated depth to the top ofobjective horizons, the proposed mud program, the proposed casing program, including size and weightthereof, the depth at which each casing string is to be set, the proposed pad layout, including cut and ll diagrams, and the proposed amount of cement to be used, including the estimated top of cement. Prior to the commencement of recompletion operations or drilling horizontally in the existing pool, an application for permit shall be led with the director

. Included in such application shall be the notice of intention (form 4) to reenter a well by drilling horizontally, deepening, or plugging back to any source of supply other than the producing horizon in an existing well. Such notice shall include the name and le number and exact location ofthe well, the approximate date operations will begin, the proposed procedure, the estimated completed total depth, the anticipated hydrogen sulde content in produced gas from the proposed source of supply, the weight and grade of all casing currently installed in the well unless waived by the director, the casing program to be followed, and the original total depth with a permitfee offty dollars. The director may deny any application if it is determined, in accordance with the latestversion ofANSI/NACE MR0175/ISO 15156, thatthe casing currently installed in thewell would be subject to sulde stress cracking.

19 4/2012The applicant shall provide all information, in addition to that specically required by this section, if requested by the director

. The director may impose such terms and conditions on the permits issued underthis section as the director deems necessary

. The director shall deny an application for a permit under this section if the proposal would cause, or tend to cause, waste or violate correlative rights. The director of oil and gas shall state in writing to the applicant the reason for the denial of the permit. The applicant may appeal the decision of the director to the commission. A permit to drill automatically expires one year afterthe date itwas issued, unless the well is drilling or has been drilled below surface casing. A permit to recomplete or to drill horizontally automatically expires one year after the date it was issued, unless such project has commenced. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; May 1, 1994; September 1, 2000; July 1, 2002; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-05 **Law Implemented:**  NDCC 38-08-05 **43-02-03-16.1. Designation**  **and responsibilities**  **of operator** 

**.** The principal on the bond covering a well is the operator of the well. The operator is responsibleforcompliancewith all laws relating to thewell and well site. Adispute over designation of the operator of a well may be addressed by the commission. In doing so, the factors the commission may consider include those set forth in subsection 1 of section 43-02-03-16.2. **History:** Ef fective December 1, 1996. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-16.2. Revocation**  **and limitation**  **of drilling**  **permits.** 1. After notice and hearing, the commission may revoke a drilling, recompletion, or reentry permit or limit its duration. The commission may act upon its own motion or upon the application ofan owner in the spacing or drilling unit. In deciding whether to revoke or limit a permit, the factors that the commission may consider include:

a. The technical ability of the permitholder and other owners to drill and complete the well. b. Theexperienceofthe permitholderand otherowners in drilling and completing similar wells.

c. The number ofwells in the area operated by the permitholder and other owners.

4/2012 20d. Whether drainage ofthe spacing or drilling unit has occurred or is likelytooccurinthe immediatefutureandwhetherthe permitholder has committed to drill a well in a timely fashion.

e. Contractual obligations such as an expiring lease. f. Theamountofownershipthepermitholderandotherownershold in the spacing ordrilling unit. Ifthe permitholderisthe majorityowner in the unitorifits interestwhen combinedwith thatofitssupporters is a majority ofthe ownership, it is presumed thatthe permitholder should retain the permit. This presumption, even if not rebutted, does not prohibit the commission from limiting the duration of the permit. However, ifthe amount ofthe interest owned bythe owner seeking revocation orlimitation and its supporters are a majorityof the ownership, the commission will presumethatthe permitshould be revoked. 2. The commission may suspend a permit that is the subject of a revocation or limitation proceeding. A permit will not be suspended or revoked after operations have commenced. 3. If the commission revokes a permit upon the application of an owner and issues a permit to that owner or to another owner who supported revocation, the commission may limit the duration ofsuch permit. The commission may also, if the parties fail to agree, order the owner acquiring the permit to pay reasonable costs incurred by the former permitholder and the conditions under which payment is to be made. The costs forwhich reimbursement may be ordered may include those involving surveyofthewell site, title search ofsurface and mineral title, and preparation ofan opinion of mineral ownership. 4. If the commission declines to revoke a permit or limit the time within which it must be exercised, it may include a term in its order restricting the ability ofthe permitholderto renewthe permit orto acquire another permit within the same spacing or drilling unit. **History:** Ef fective December 1, 1996; amended ef fective January 1, 2006. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-16.3. Recovery**  **of a**  **risk penalty** 

**.** The following govern the recovery of the risk penalty pursuant to subsection 3 of North Dakota Century Code section 38-08-08 and subsection 3 of North Dakota Century Code section 38-08-09.4: 1. An owner may recover the risk penalty under the provisions of subsection 3 ofNorth Dakota CenturyCode section 38-08-08, provided the owner gives, to the owner from whom the penalty is sought, a written invitation to participate in the risk and cost of drilling a well, 21 4/2012including reentering a plugged and abandoned well, or the risk and cost of reentering an existing well to drill deeperor a horizontal lateral. Ifthe nonparticipating owner’s interest is notsubjectto a lease orother contract for development, an owner seeking to recover a risk penalty must also make a good-faith attempt to have the unleased owner execute a lease.

a. The invitation to participate in drilling must contain the following: (1) Theapproximate location ofthe proposed orexistingwell and its proposed depth and objective zone. (2) An itemization of the estimated costs of drilling and completion. (3) The approximate date upon which the well was or will be spudded or reentered. (4) Astatement indicating the invitation must be accepted within thirty days of receiving it. (5) Notice that the participating owners plan to impose a risk penaltyand thatthe nonparticipating ownermayobjecttothe risk penalty by either responding in opposition to the petition fora riskpenalty, orifnosuch petition has been led, byling an application or requestfor hearing with the commission. (6) Drilling or spacing unit description. b. Anelectiontoparticipatemustbeinwritingand mustbereceived by the ownergiving the invitation within thirtydays ofthe participating party’s receipt ofthe invitation.

c. An invitation to participate and an election to participate must be served personally, by mail requiring a signed receipt, or by overnight courier or delivery service requiring a signed receipt. Failuretoacceptmail requiring asigned receiptconstitutesservice. d. An election to participate is only binding upon an owner electing to participate if the well is spudded or reentry operations are commenced on or before ninety days after the date the owner extending the invitation to participate sets as the date upon which a response to the invitation is to be received. It also expires ifthe permit to drill or reenter expires without having been exercised. If an election to participate lapses, a risk penalty can only be collected ifthe ownerseeking itagain complieswith the provisions of this section.

4/2012 222. An owner may recover the risk penalty under the provisions of subsection 3 of North Dakota Century Code section 38-08-09.4, provided the owner gives, to the owner from whom the penalty is sought, a written invitation to participate in the unit expense. If the nonparticipating owner’s interest is not subject to a lease or other contract for development, an owner seeking to recover a risk penalty must also make a good-faith attempt to have the unleased owner execute a lease.

a. The invitation to participate in the unit expense must contain the following: (1) A description of the proposed unit expense, including the location, objectives, and plan ofoperation. (2) An itemization ofthe estimated costs. (3) Theapproximatedate uponwhich the proposalwasorwill be commenced. (4) Astatement indicating the invitation must be accepted within thirty days of receiving it. (5) Notice that the participating owners plan to impose a risk penaltyand thatthe nonparticipating ownermayobjecttothe risk penalty by either responding in opposition to the petition fora riskpenalty, orifnosuch petition has been led, byling an application or requestfor hearing with the commission. b. Anelectiontoparticipatemustbeinwritingand mustbereceived by the ownergiving the invitation within thirtydays ofthe participating party’s receipt ofthe invitation.

c. An invitation to participate and an election to participate must be served personally, by mail requiring a signed receipt, or by overnight courier or delivery service requiring a signed receipt. Failuretoacceptmail requiring asigned receiptconstitutesservice. d. An election to participate is only binding upon an owner electing to participate if the unit expense is commenced within ninety days after the date the owner extending the invitation request to participate sets as the date upon which a response to the request invitation is to be received. If an election to participate lapses, a risk penalty can only be collected if the owner seeking it again complies with the provisions ofthis section.

e. An invitation to participate in a unit expense covering monthly operating expensesshall beef fectiveforall such monthlyoperating expenses for a period ofve years ifthe unit expense identied in 23 4/2012the invitation to participate is rst commenced within ninety days after the date set in the invitation to participate as the date upon which a response to the invitation to participate must be received. An election to participate in a unit expense covering monthly operating expenses is ef fective for ve years after operations are rst commenced. If an election to participate in a unit expense comprised of monthly operating expenses expires or lapses after veyears, a risk penalty mayonly be assessed and collected ifthe ownerseeking the penalty once again complies with this section. 3. Upon its own motion or the request of a party, the commission may include in a pooling order requirements relating to the invitation and election to participate, in which casethe pooling orderwill control tothe extent it is inconsistent with this section. **History:** Ef fective December 1, 1996; amended ef fective May 1, 2004; January 1, 2006; January 1, 2008; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04, 38-08-08 **43-02-03-17. Sign**  **on well.**  Everywell associated with the production ofoil and gas except plugged wells shall be identied by a sign posted on the derrick or not more than twentyfeet [6.10 meters] from the well. The sign shall be ofdurable constructionandtheletteringthereonshall bekeptinalegibleconditionandshall be large enough to be legible under normal conditions ata distance offtyfeet [15.24 meters]. The wells on each lease or property shall be numbered in nonrepetitive sequence, unlesssomeothersystem ofnumberingwasadopted bytheownerprior to the adoption of this chapter

. Each sign must show the well name and number (which shall be dif ferent or distinctive for each well), the name ofthe operator, le number, and the location by quarter-quarter, section, township, and range. Existingwell identication signsthatareotherwise in accordwiththissection exceptthatwell locations are shown by quartersection ratherthan quarter-quarter section or show the permit number ratherthan the le number shall be allowed to remain. **History:** Amended ef fective January 1, 1983; May 1, 1992; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-18. Drilling**  **units -** **W ell**  **locations.** In the absence ofan orderby the commission setting spacing units for a pool: 1. a. V ertical or directional oil wells projected to a depth not deeper than the Mission Canyon formation must be drilled upon a governmental quarter-quarter section or equivalent lot, located not less than ve hundred feet [152.4 meters] to the boundary of such governmental quarter-quarter section or equivalent lot. No more than one well shall be drilled to the same pool on any such
4/2012 24governmental quarter-quarter section or equivalent lot, except by order ofthe commission, nor shall any well be drilled on any such governmental quarter-quarter section or equivalent lot containing less than thirty-six acres [14.57 hectares] except by order of the commission. b. V ertical or directional oil wells projected to a depth deeper than the Mission Canyon formation must be drilled on a governmental quartersection orequivalentlots, located notlessthan sixhundred sixty feet [201.17 meters] to the boundary of such governmental quarter section or equivalent lots. No more than one well shall be drilled to the same pool on any such governmental quartersection or equivalent lots, except by order of the commission, nor shall any well be drilled on any such governmental quarter section or equivalent lots containing less than one hundred forty-ve acres [58.68 hectares] except by order ofthe commission. 2. a. Horizontal wells with a horizontal displacement of the well bore drilled at an angle of at least eighty degrees within the productive formation ofat least ve hundred feet [152.4 meters], projected to a depth not deeper than the Mission Canyon formation, must be drilled upon a drilling unit described as a governmental section or describedastwoadjacentgovernmentalquartersectionswithinthe same section orequivalent lots, located not less than ve hundred feet [152.4 meters] to the outside boundary of such tract. The horizontalwell proposedto bedrilled must, inthedirector’sopinion, justifythe creation ofsuch drilling unit. No more than onewell may be drilled to the same pool on any such tract, except by order of the commission. b. Horizontal wells with a horizontal displacement of the well bore drilled at an angle of at least eighty degrees within the productive formation of at least ve hundred feet [152.4 meters], projected to a depth deeper than the Mission Canyon formation, must be drilled upon a drilling unit described as a governmental section, located notlessthanve hundredfeet[152.4 meters]totheoutside boundary ofsuch tract. The horizontal well proposed to be drilled must, in the director’s opinion, justify the creation of such drilling unit. No morethan onewell may be drilled tothesame pool on any such tract, except by order ofthe commission. 3. a. Gaswells projected toadepth notdeeperthanthe Mission Canyon formation shall be drilled upon a governmental quarter section or equivalent lots, located not less than ve hundred feet [152.4 meters] to the boundary of such governmental quarter section or equivalent lots. No more than one well shall be drilled to the same pool on any such governmental quarter section or equivalent lots, except by orderofthe commission, norshall anywell be drilled on anysuch governmental quartersection orequivalent lotcontaining
25 4/2012less than one hundred forty-ve acres [58.68 hectares] except by order ofthe commission. b. Gas wells projected to a depth deeper than the Mission Canyon formation shall be drilled upon a governmental quarter section or equivalent lots, located not less than six hundred sixtyfeet [201.17 meters] to the boundary of such governmental quarter section or equivalent lots. No more than one well shall be drilled to the same pool on any such governmental quarter section or equivalent lots, except by orderofthe commission, norshall anywell be drilled on anysuch governmental quartersection orequivalent lotcontaining less than one hundred forty-ve acres [58.68 hectares] except by order ofthe commission. 4. Within thirty days, or a reasonable time thereafter, following the discovery of oil or gas in a pool not then covered by an order of the commission, a spacing hearing shall be docketed. Following such hearing the commission shall issue an order prescribing a temporary spacing pattern for the development of the pool. This order shall continue in force for a period of not more than three years at the expiration of which time a hearing shall be held at which the commission may require the presentation of such evidence as will enable the commission to determine the properspacing forthe pool. Duringthe interim period betweenthediscoveryand the issuanceofthe temporary order, no permits shall be issued for the drilling of an of fset well to the discovery well, unless approved by the director

. Approval shall be consistentwith anticipated spacingfortheorderlydevelopment of the pool. Anywell drilled within one mile [1.61 kilometers] ofan established eld shall conform to the spacing requirements in thateld exceptwhen it is apparent that the well will not produce from the same common source ofsupply

. In orderto assure uniform and orderlydevelopment, anywell drilled within one mile [1.61 kilometers] ofan established eld boundary shall conform to the spacing and special eld rules for the eld, and for the purposes of spacing and pooling, the eld boundary shall be extended to include the spacing unit for such well and any intervening lands. The foregoing shall not be applicable if it is apparent that the well will not produce from the same common source ofsupply as wells within the eld.

4/2012 265. Ifthe directordenies an application for permit, the directorshall advise the applicant immediatelyofthe reasonsfordenial. The decision ofthe director may be appealed to the commission. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; May 1, 1994; July 1, 1996; July 1, 2002; January 1, 2006; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04, 38-08-07 **Law Implemented:**  NDCC 38-08-04, 38-08-07 **43-02-03-18.1. Exception**  **location.** If upon application for an exception location, the commission nds that a well drilled at the location prescribed by any applicable rule ororderofthe commission would not produce in paying quantities, that surface conditions would substantially add to the burden or hazard of such well, orthatthedrilling ofsuchwell ata location otherthanthe prescribed location is otherwisenecessaryeithertoprotectcorrelativerights, topreventwaste, ortoef fect greater ultimate recovery from oil and gas, the commission may enter an order, after notice and hearing, permitting the well to be drilled at a location other than that prescribed and shall include in such order suitable provisions to prevent the production from thatwell ofmorethan itsjustand equitableshare ofthe oil and gas inthepool. Theapplicationforanexceptionwell locationshallsetforththenamesof the lessees ofadjoining properties and the names ofany unleased mineral owners oftheadjoining properties. Theapplicationshall beaccompanied byaplatorsketch accuratelyshowing the propertyforwhich the exception well location is sought, the location of the proposed well, and all other completed and drilling wells on this property and on the adjoining properties. The applicant or its attorney shall certify thata copyofthe application has been sentto all lessees and all unleased mineral owners of properties adjoining the tract which would be af fected by the exception location. Ifthe applicant is the lessee ofadjoining tracts thatwould be af fected by the exception, the applicant mustgive notice, as prescribed above, to its lessors of such tracts. **History:** Ef fective January 1, 1983; amended ef fective May 1, 1990; May 1, 1994; July 1, 1996; January 1, 2008. **General Authority:**  NDCC 38-08-04, 38-08-07 **Law Implemented:**  NDCC 38-08-04, 38-08-07 **43-02-03-19. Site**  **construction.** In the construction of a drill site, access road, and all associated facilities, the topsoil shall be removed, stockpiled, and stabilized or otherwise reserved for use when the area is reclaimed. "T opsoil" meansthe suitable plantgrowth material on the surface; however, in no eventshall this bedeemedto be morethanthetopeightinches [20.32centimeters] ofsoil. Soil stabilization additives and materialsto be used onsite, access roads, orassociated facilities must have approval from the director before application. When necessary to prevent pollution of the land surface and freshwaters, the director may require the drill site to be sloped and diked.

27 4/2012Well sites and associated facilities shall not be located in, or hazardously near, bodies ofwater, norshall they block natural drainages. Sites and associated facilities shall be designed to divert surface drainage from entering the site. Well sites and associated facilities or appropriate parts thereof shall be fenced if required by the director

. Within six months after the completion ofa well, the portion ofthe well site not used forwell operations shall be reclaimed, unlesswaived bythe director

. Well sites and all associated facilities shall be stabilized to prevent erosion. **History:** Amended ef fective March 1, 1982; January 1, 1983; May 1, 1992; July 1, 2002; January 1, 2008; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-19.1. Fencing,**  **screening, and**  **netting of**  **drilling and**  **reserve pits.**  All open pits and ponds which contain saltwater must be fenced. All pits and ponds which contain oil must be fenced, screened, and netted. This is not to be construed as requiring the fencing, screening, or netting of a drilling pit or reserve pit used solely for drilling, completing, recompleting, or plugging unless such pit is not reclaimed within ninety days after completion of drilling operations. **History:** Ef fective May 1, 1992; amended ef fective April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-19.2. Disposal**  **of waste**  **material.** All waste material associated with exploration or production of oil and gas must be properly disposed of in an authorized facility in accord with all applicable local, state, and federal laws and regulations. All waste material recovered from spills, leaks, and other such events shall immediately be disposed of in an authorized facility, although the remediation of such material may be allowed onsite ifapproved by the director

. This is not to be construed as requiring the of fsite disposal of drilling mud from shallow wells or drill cuttings associated with the drilling of a well. However, water remaining in a drilling or reserve pit used in the drilling and completion operations is to be removed from the pit and disposed ofin an authorized disposal well or used in a manner approved by the director

. The disposition or use of

4/2012 28the water must be included on the sundry notice (form 4) reporting the plan of reclamation pursuant to sections 43-02-03-19.4 and 43-02-03-19.5. **History:** Ef fective May 1, 1992; amended ef fective May 1, 1994; September 1, 2000; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-19.3. Earthen**  **pits and**  **open receptacles.**  Except as otherwise provided in section 43-02-03-19, no saltwater, drilling mud, crude oil, waste oil, or other waste shall be stored in earthen pits or open receptacles except in an emergency and upon approval by the director

. A lined earthen pit or open receptacle may be temporarily used to retain oil, water, cement, solids, or uids generated in well completion, servicing, or plugging operations. A pit or receptacle used forthis purpose must be suf ciently impermeableto provideadequatetemporarycontainmentoftheoil, water, oruids. The contents of the pit or receptacle must be removed within seventy-two hours after operations have ceased and must be disposed of at an authorized facility in accordance with section 43-02-03-19.2. Within thirty days after operations have ceased, the earthen pit shall be reclaimed and the open receptacle shall be removed. The director may grant an extension of the thirty-day time period to no more than one year for good reason. The director may permit pits or receptacles used solely for the purpose of aringcasingheadgas. Apitorreceptacleusedforthispurpose mustbesuf ciently impermeable to provide adequate temporary containment ofuids. Permission for such pit or receptacle shall be conditioned on locating the pit not less than one hundred ftyfeet [45.72 meters] from the vicinity ofwells and tanks and keeping it free of any saltwater, crude oil, waste oil, or other waste. Saltwater, drilling mud, crudeoil, wasteoil, orotherwasteshall be removedfromthe pitorreceptaclewithin twenty-fourhours afterbeing discovered and must be disposed ofatan authorized facility in accordance with section 43-02-03-19.2. The director may permit pits used solely for storage of freshwater used in completion and well servicing operations. Permits forfreshwater pits shall be valid fora period ofone yearbut may be reauthorized upon application. Freshwaterpits shall be lined and no pit constructed for this purpose shall be wholly or partially constructed in ll dirt unless approved by the director

. The director may approve chemical treatment to municipal drinking water standards upon application. The freshwater pit shall have signage on all sides accessible to vehiculartraf c clearly identifying the usage as freshwater only

. **History:** Ef fective September 1, 2000; amended ef fective April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04

29 4/2012**43-02-03-19.4. Drilling**  **pits.** A pit may be utilized to bury drill cuttings and solids generated during well drilling and completion operations, providing the pit can be constructed, used, and reclaimed in a manner that will prevent pollution of the land surface and freshwaters. In special circumstances, the director may prohibitconstruction ofa cuttings pitormay impose more stringent pitconstruction and reclamation requirements. Reserve and circulation of mud system through earthen pits are prohibited unless a waiver is granted by the director

. All pits shall be inspected byan authorized representative ofthe directorpriorto lining and use. Under no circumstances shall pits be used for disposal, dumping, or storage of uids, wastes, and debrisotherthan drill cuttingsand solids recoveredwhiledrilling and completing the well. Drill cuttings and solids must be stabilized in a manner approved by the director priorto placement in a cuttings pit. Any liquid accumulating in the cuttings pitshall be promptlyremoved. The pitshall bediked in a mannerto preventsurface water from running into the pit. Asmall lined pitcan beauthorized bythedirectorfortemporarycontainment ofincidental uids such as trench waterand rig wash, ifemptied and covered prior to the rig leaving the site. Pits shall not be located in, or hazardously near, bodies ofwater, nor shall they block natural drainages. No pit shall be wholly or partially constructed in ll dirt unless approved by the director

. When required by the director, the drilling pit or appropriate parts thereof shall be fenced. Within thirty days afterthe drilling ofa well or expiration ofa drilling permit, drilling pitsshall be reclaimed. Thedirectormaygrantan extension ofthethirty-day timeperiodtonomorethanoneyearforgood reason. Priortoreclaimingthepit, the operatororthe operator’s agent shall le a sundry notice (form 4) with the director and obtain approval of a pit reclamation plan. V erbal approval to reclaim the pit may be given. The notice shall include: 1. The name and address ofthe reclamation contractor; 2. The name and address ofthe surface owner; 3. The location and name of the disposal site for the pit water when applicable; and 4. A description ofthe proposed work, including details on treatment and disposition ofthe drilling waste. Any water or oil accumulated on the pit must be removed prior to reclamation. Drilling waste shall be encapsulated in the pit and covered with

4/2012 30at least four feet [1.22 meters] of backll and topsoil and surface sloped, when practicable, to promote surface drainage awayfrom the reclaimed pit area. **History:** Ef fective April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-19.5. Reserve**  **pit for**  **drilling mud**  **and drill**  **cuttings from**  **shallow wells.**  For wells drilled to a strata or formation, including lignite or coal strata orseam, located above the depth ofve thousand feet [1524 meters] below the surface, or located more than ve thousand feet [1524 meters] below the surface but above the top of the Rierdon formation, a container or reserve pit of suf cient size to contain said material or uid, and the accumulation of drill cuttings may be utilized to contain solids and uids used and generated during well drilling and completion operations, providing the pit can be constructed, used and reclaimed in a manner that will prevent pollution of the land surface and freshwaters. A reserve pit may be allowed by an order of the commission after notice and hearing for wells drilled within a specied eld and pool more than ve thousand feet [1524 meters] below the surface and below the top of the Rierdon formation provided the proposed well or wells utilized a low sodium content water-based mud system, and the reserve pit can be constructed, used, and reclaimed in a manner that will prevent pollution of the land surface and freshwaters. In special circumstances, based on site-specic conditions, the director or authorized representative may prohibit construction of a reserve pit or may impose more stringent pit construction and reclamation requirements, including reserve pits previously authorized by a commission order within a specied eld and pool. Under no circumstances shall reserve pits be used for disposal, dumping, orstorage ofuids, wastes, and debris otherthan drill cuttings and uids used or recovered while drilling and completing the well. Reserve pits shall not be located in, or hazardously near, bodies ofwater, nor shall they block natural drainages. No reserve pit shall be wholly or partially constructed in ll dirt unless approved by the director

. Within a reasonable time, but not more than one year after the completion of a shallow well, or prior to drilling below the surface casing shoe on any other well, the reserve pit shall be reclaimed. Priorto reclaiming the pit, the operator or the operator’s agent shall le a sundry notice (form 4) with the director and obtain approval ofa pit reclamation plan. V erbal approval to reclaim the pit may be given. The notice shall include: 1. The name and address ofthe reclamation contractor; 2. The name and address ofthe surface owner; 3. The location and name ofthe disposal site forthe pitwater; and 4. A description ofthe proposed work, including details on treatment and disposition ofthe drilling waste.
31 4/2012All pit water must be removed prior to reclamation. Drilling waste should be encapsulated in the pit and covered with at least fourfeet [1.22 meters] of backll and topsoil and surface sloped, when practicable, to promote surface drainage away from the reclaimed pit area. **History:** Ef fective April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-20. Sealing**  **off strata.**  During the drilling of any oil or natural gas well, all oil, gas, and waterstrata above the producing horizon shall be sealed orseparated where necessary in orderto prevent their contents from passing into other strata. All freshwaters and waters of present or probable value for domestic, commercial, or stock purposes shall be conned to their respective strata and shall be adequately protected by methods approved by the commission. Special precautions shall be taken in drilling and plugging wells to guard against any loss of artesian water from the strata in which it occurs and the contamination of artesian water by objectionable water, oil, or gas. All water shall be shut of f and excluded from the various oil-bearing and gas-bearing strata which are penetrated. Water shutof fs shall ordinarily be made by cementing casing or landing casing with orwithoutthe use of mud-laden uid. **History:** Amended ef fective May 1, 1992. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-21. Casing,**  **tubing, and**  **cementing requirements.**  All wells drilledforoil, naturalgas, orinjectionshall becompletedwithstringsofcasingwhich shall be properlycemented atsuf cientdepthsto adequately protectand isolate all formationscontainingwater, oil, orgasoranycombinationofthese; protectthe pipe through salt sections encountered; and isolate the uppermost sand ofthe Dakota group. Drilling of the surface hole shall be with freshwater-based drilling mud or other method approved by the director which will protect all freshwater-bearing strata. The surface casing shall consistofneworreconditioned pipe that has been previously tested to one thousand pounds per square inch [6900 kilopascals]. The surface casing shall be set and cemented at a point not less than fty feet [15.24 meters] below the base of the Fox Hills formation. Suf cient cement shall be used on surface casing toll the annularspace behind the casing to the bottom of the cellar, if any, or to the surface of the ground. If the annulus space is not adequately lled with cement, the director shall be notied immediately

. The operator shall diligently perform remedial work after obtaining approval from the director

. All strings of surface casing shall stand cemented under pressure for at least twelve hours before drilling the plug or initiating tests. The term "under pressure" as used herein shall be complied with if one oat valve is used or if
4/2012 32pressure is otherwise held. Cementing shall be by the pump and plug method or other methods approved by the director

. The director is authorized to require an accurate gauge be maintained on the surface casing of any well, not properly plugged and abandoned, todetectanybuildupofpressurecaused bythe migration of uids. Surface casing strings must be allowed to stand underpressure until thetail cement has reached a compressive strength of at least ve hundred pounds per square inch [3450 kilopascals]. All llercements utilized mustreach a compressive strength of at least two hundred fty pounds per square inch [1725 kilopascals] within twenty-four hours and at least three hundred fty pounds per square inch [2415 kilopascals] within seventy-two hours. All compressive strengths on surface casing cement shall be calculated at a temperature of eighty degrees Fahrenheit [26.67 degrees Celsius]. Production or intermediate casing strings shall consist of new or reconditioned pipe that has been previously tested to two thousand pounds per square inch [13800 kilopascals]. Such strings must be allowed to stand under pressure until the tail cement has reached a compressive strength of at least ve hundred pounds per square inch [3450 kilopascals]. All ller cements utilized must reach a compressive strength ofat leasttwo hundred fty pounds per square inch [1725 kilopascals] within twenty-four hours and at least ve hundred pounds per square inch [3450 kilopascals] within seventy-two hours, although in any horizontal well performing a single stage cement job from a measured depth of greater than thirteen thousand feet [3962.4 meters], the ller cement utilized must reach a compressive strength ofat leasttwo hundred fty pounds per square inch [1725 kilopascals] within forty-eight hours and at least ve hundred pounds persquare inch [3450 kilopascals] within ninety-six hours. All compressive strengths on production or intermediate casing cement shall be calculated at a temperature found in the Mowry formation using a gradient of 1.2 degrees Fahrenheit per one hundred feet [30.48 meters] of depth plus eighty degrees Fahrenheit [26.67 degrees Celsius]. After cementing, the casing string shall be tested by application of pump pressure of at least one thousand ve hundred pounds per square inch [10350 kilopascals]. If, at the end of thirty minutes, this pressure has dropped one hundred fty pounds per square inch [1035 kilopascals] or more, the casing shall be repaired after receiving approval from the director

. Thereafter, the casing shall again be tested in the same manner

. Further work shall not proceed until a satisfactory test has been obtained. The casing in a horizontal well may be tested by use of a mechanical tool set near the casing shoe after the horizontal section has been drilled. All owing wells must be equipped with tubing. A tubing packer must also be utilized unless a waiver is obtained after demonstrating the casing will not be

33 4/2012subjected to excessive pressure orcorrosion. The packer must be set as nearthe producing interval as practicable, but in all cases must be above the perforations. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; July 1, 1996; January 1, 1997; September 1, 2000; July 1, 2002; May 1, 2004; January 1, 2006; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-22. Defective**  **casing or**  **cementing.** In any well that appears to have defective casing or cementing, the operator shall report the defect to the director on a sundry notice (form 4). Prior to attempting remedial work on any casing, the operator must obtain approval from the director and proceed with diligence to conduct tests, as approved or required by the director, to properly evaluate the condition of the well bore and correct the defect. The director is authorized to require a pressure test to verify casing integrity if its competence is questionable. Thedirectormayallowthewell borecondition to remain ifcorrelative rights can be protected without endangering potable waters. The well shall be properly plugged if requested by the director

. Anywell with open perforations above a packershall be considered to have defective casing. **History:** Amended ef fective January 1, 1983; May 1, 1992; September 1, 2000; July 1, 2002; May 1, 2004; January 1, 2008. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-23. Blowout**  **prevention.** In all drilling operations, proper and necessary precautions shall be taken for keeping the well under control, including the use of a blowout preventer and high pressure ttings attached to properly cemented casing strings adequate to withstand anticipated pressures. During the course ofdrilling, the pipe rams shall be functionally operated at least once every twenty-four-hourperiod. The blind ramsshall befunctionallyoperated each tripout ofthe well bore. The blowout preventer shall be pressure tested at installation on thewellhead, after modication ofany equipment, and everythirtydays thereafter

. The director may postpone such pressure test if the necessity therefor can be demonstrated to the director’s satisfaction. All tests shall be noted in the driller’s record. **History:** Amended ef fective January 1, 1983; September 1, 2000; July 1, 2002. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-24. Pulling**  **string of** **casing.** In pulling strings ofcasing from any oil, gas, or injection well, the space above the casing stub shall be kept and left full ofuid with adequate gel strength and specic gravity, cement, orcombination thereof, to seal of fall freshwater and saltwater strata and any strata bearing oil or

4/2012 34gas not producing. No casing shall be removed without the prior approval of the director

. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-25. Deviation**  **tests and**  **directional surveys.**  When any well is drilled or deepened, tests to determine the deviation from the vertical shall be taken at least every one thousand feet [304.8 meters]. The director is authorized to waive the deviation test for a shallow gas well if the necessity therefor can be demonstrated to the director’s satisfaction. When the deviation from the vertical exceeds ve degrees at any point, the director may require that the hole be straightened. Directional surveys may be required by the director, whenever, in the director’sjudgment, the location ofthe bottom ofthe well is in doubt. A directional survey shall be made and led with the director on any well utilizing awhipstockorany method ofdeviating thewell bore. The obligation to run the directional survey may be waived by the directorwhen a well bore is deviated to sidetrackjunk in the hole, straighten a crooked hole, control a blowout, or ifthe necessity therefor can be demonstrated to the director’s satisfaction. The survey contractor shall le with the director free of charge one certied electronic copy of all surveys, in a form approved by the director, within thirty days of attaining total depth. Such survey shall be in reference to true north. The director may require the directional surveyto be led immediately aftercompletion ifthe survey is needed to conduct the operation of the director’s of ce in a timely manner

. Special permits may be obtained to drill directionally in a predetermined direction as provided above, from the director

. Ifthe director denies a request for a permit to directionally drill, the director shall advise the applicant immediately of the reasons for denial. The decision of the director may be appealed to the commission. **History:** Amended ef fectiveApril 1, 1980; April 30, 1981; January 1, 1983; May 1, 1990; May 1, 1992; May 1, 1994; September 1, 2000; January 1, 2006; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-26. Multiple**  **zone completions.**  Multiple zone completions in any pool may be permitted by the director

. An application for a multiple zone completion shall be accompanied by an exhibitshowing the location ofall wells on the applicant’s lease and all of fsetwells on of fset leases and shall set forth all material facts on the common sources of supply involved and the manner and method ofcompletion proposed. Multiply completed wells shall at all times be operated, produced, and maintained in a manner to ensure the complete segregation of the various
35 4/2012common sources of supply

. The director may require such tests as the director deems necessaryto determine the ef fectiveness ofthe segregation ofthe dif ferent sources of supply

. **History:** Amended ef fective January 1, 1983; May 1, 1992. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-27. Perforating,**  **fracturing, and**  **chemically treating**  **wells.** The director may prescribe pretreatment casing pressure testing as well as other operational requirements designed to protect wellhead and casing strings during treatment operations. If damage results to the casing or the casing seat from perforating, fracturing, orchemicallytreating a well, the operatorshall immediately notify the director and proceed with diligence to use the appropriate method and means for rectifying such damage, pursuantto section 43-02-03-22. Ifperforating, fracturing, or chemical treating results in irreparable damage which threatens the mechanical integrity ofthe well, the commission may require the operator to plug the well. **History:** Amended ef fective January 1, 1983; May 1, 1992; April 1, 2010. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-27.1. Hydraulic**  **fracture stimulation.**  1. For hydraulic fracture stimulation performed through a frac string run inside the intermediate casing string:

a. Thefracstring must be eitherstung into a linerorrun with a packer set at a minimum depth ofone hundred feet [30.48 meters] below thetop ofcementorone hundred feet [30.48 meters] belowthetop ofthe Inyan Kara formation, whichever is deeper

. b. The intermediate casing-frac string annulus must be pressurized and monitored during frac operations.

c. An adequately sized, function tested pressure reliefvalve must be utilized on the treating lines from the pumps to the wellhead, with suitablecheckvalvestolimitthevolumeofowbackuidshouldthe reliefvalve open. The reliefvalve must be setto limit line pressure to no more than eighty-ve percentofthe internal yield pressure of the frac string. d. An adequately sized, function tested pressure relief valve and an adequate sized diversion line must be utilized to divert ow from the intermediate casing to a pit or containment vessel in case of frac string failure. The relief valve must be set to limit annular pressure to no more than eighty-ve percent ofthe lowest internal yield pressure ofthe intermediate casing string. 4/2012 36e. The surface casing valve must be fully open and connected to a diversion line rigged to a pit or containment vessel. f. An adequately sized, function tested remote operated frac valve must be utilized between the treating line and the wellhead.
g. Within sixty days after the hydraulic fracture stimulation is performed, the owner, operator, or service company shall post on the fracfocus chemical disclosure registry all elements made viewable by the fracfocus website. 2. For hydraulic fracture stimulation performed through an intermediate casing string:

a. The maximum treating pressure shall be no greater than eighty-ve percent of the American petroleum institute rating ofthe intermediate casing. b. Casing evaluation tools to verify adequate wall thickness of the intermediate casing shall be run from the wellhead to a depth as close as practicable to one hundred feet [30.48 meters] above the completion formation and a visual inspection with photographs shall be made of the top joint of the intermediate casing and the wellhead ange. If the casing evaluation tool or visual inspection indicates wall thickness is below the American petroleum institute minimum or a lighterweight of intermediate casing than the well design called for, calculations must be made to determine the reduced pressure rating. If the reduced pressure rating is less than the anticipated treating pressure, a frac string shall be run inside the intermediate casing.

c. Cement evaluation tools to verify adequate cementing of the intermediate casing shall be run from the wellhead to a depth as close as practicable to one hundred feet [30.48 meters] above the completion formation. (1) If the cement evaluation tool indicates defective casing or cementing, a frac string shall be run inside the intermediate casing. (2) Ifthe cement evaluation tool indicates the top ofthe cement behind the intermediate casing is belowthe top ofthe Mowry formation, a frac string shall be run inside the intermediate casing. d. The intermediate casing and wellhead must be pressure tested to a minimum depth ofone hundred feet [30.48 meters] belowthetop 37 4/2012ofthe T ylerformation for at least thirty minutes with less than ve percent loss to a pressure equal to or in excess of the maximum frac design pressure.

e. Ifthepressureratingofthewellheaddoesnotexceedthemaximum frac design pressure, a wellhead and blowout preventer protection system must be utilized during the frac. f. An adequately sized, function tested pressure relief valve must be utilized on the treating lines from the pumps to the wellhead, with suitable check valves to limit the volume of owback uid should be the relief valve open. The relief valve must be set to limit line pressure to no greater than the test pressure of the intermediate casing, less one hundred pounds per square inch [689.48 kilopascals].
g. The surface casing value must be fully open and connected to a diversion line rigged to a pit or containment vessel. h. An adequately sized, function tested remote operated frac valve must be utilized between the treating line and the wellhead. i. Within sixty days after the hydraulic fracture stimulation is performed, the owner, operator, or service company shall post on the fracfocus chemical disclosure registry all elements made viewable by the fracfocus website. 3. Ifduringthestimulation, the pressure inthe intermediatecasing-surface casing annulus exceeds three hundred fty pounds per square inch [2413 kilopascals] gauge, the owner or operator shall verbally notify the director as soon as practicable but no later than twenty-four hours following the incident. **History:** Ef fective April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-28. Safety**  **regulation.** During drilling operations all oil wells shall be cleaned into a pitortank, not less than fortyfeet [12.19 meters] from the derrick oor and one hundred fty feet [45.72 meters] from any re hazard. All owing oil wells must be produced through an approved oil and gas separator or emulsion treater of ample capacity and in good working order

. No boiler, portable electric lighting generator, or treater shall be placed nearer than one hundred fty feet [45.72 meters] to any producing well or oil tank. Placement as close as one hundred twenty-ve feet [38.10 meters] may be allowed ifa ame arrestor is utilized on the equipment. Any rubbish or debris that might constitute a re hazard shall be removed to a distance of at least one hundred fty feet [45.72 meters] from the vicinity of wells and tanks. All waste shall be burned or 4/2012 38disposed of in such manneras to avoid creating a re hazard. All vegetation must be removed to a safe distance from any production equipment to eliminate a re hazard. Thedirectormayrequire remoteoperated orautomaticshutdown equipment to be installed on, or shut in for no more than forty days, any well that is likely to cause a serious threat of pollution or injury to the public health orsafety

. No well shall be drilled nor production or injection equipment installed less than ve hundred feet [152.40 meters] from an occupied dwelling unless agreed to in writing bythe ownerofthe dwelling orauthorized by orderofthe commission. Subsurface pressure must be controlled during all drilling, completion, and well-servicing operations with appropriate uid weight and pressure control equipment. **History:** Amended ef fective January 1, 1983; May 1, 1990; September 1, 2000; January 1, 2006; January 1, 2008; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-29. W** **ell and**  **lease equipment.**  Wellhead and lease equipment with a working pressure at least equivalent to the calculated or known pressure to which the equipment may be subjected shall be installed and maintained. Equipment on producing wells shall be installed to facilitate gas-oil ratio tests, and static bottom hole orotherpressuretests. V alves shall be installed and maintained in good working order to permit pressure readings to be obtained on both casing and tubing. **History:** Amended ef fective January 1, 1983; January 1, 2006. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-30. Notication**  **of res,**  **leaks, spills,**  **or blowouts.**  All persons controlling or operating any well, pipeline, receiving tank, storage tank, or production facility into which oil, gas, or water is produced, received, stored, processed, or through which oil, gas, or water is injected, piped, or transported, shall verbally notifythe directorwithin twenty-four hours afterdiscoveryofanyre, leak, spill, blowout, or release ofuid. Ifany such incident occurs ortravels of fsite ofa facility, the persons, as named above, responsible for proper notication shall within a reasonable time also notify the surface owners upon whose land the incident occurred ortraveled. Notication requirements prescribed by this section shall not applyto any leak, spill, or release ofuid that is less than one barrel total volume and remains onsite of a facility

. The verbal notication must be followed by a written report within ten days after cleanup of the incident, unless deemed unnecessary by the director

. Such report must include the following information: the operator and description of the facility, the legal description of the location of the incident, date of occurrence, date of cleanup, amount and type of each uid involved, amount of each uid recovered, steps taken to remedy the situation,
39 4/2012cause of the accident, and action taken to prevent reoccurrence. The signature, title, and telephone number of the company representative must be included on such report. The persons, as named above, responsible for proper notication shall within a reasonable time also provide a copy of the written report to the surface owners upon whose land the incident occurred ortraveled. The commission, however, may impose more stringent spill reporting requirements ifwarranted by proximity to sensitive areas, past spill performance, or careless operating practices as determined by the director

. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; July 1, 1996; January 1, 2008; April 1, 2010. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-30.1. Leak**  **and spill**  **cleanup.** At no time shall any spill or leak be allowed to ow over, pool, or rest on the surface ofthe land or inltrate the soil. Discharged uids must be properly removed and may not be allowed to remain standing within or outside of diked areas, although the remediation of such uids may be allowed onsite if approved by the director

. Operators must respond with appropriate resources to contain and clean up spills. **History:** Ef fective April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-31. W** **ell log,**  **completion, and**  **workover reports.**  After the plugging of a well, a plugging record (form 7) shall be led with the director

. After the completion of a well, recompletion of a well in a dif ferent pool, or drilling horizontally in an existing pool, a completion report (form 6) shall be led with the director

. In no case shall oil orgas be transported from the lease priorto the ling of a completion report unless approved by the director

. The operator shall cause to be run an open hole electrical, radioactivity, or other similar log, or combination ofopen hole logs, ofthe operator’s choice, from which formation tops and porosity zones can be determined. The operator shall cause to be run a gamma ray log from total depth to ground level elevation of the well bore. Prior to completing the well, the operator shall cause to be run a log from which the presence and quality of bonding of cement can be determined in every well in which production or intermediate casing has been set. The obligation to log may be waived or postponed by the director if the necessity therefor can be demonstrated to the director’s satisfaction. Waiver will be contingent upon such terms and conditions as the directordeems appropriate. All logs run shall be available to the director at the well site prior to proceeding with plugging or completion operations. All logs run shall be submitted to the director free of charge. Logs shall be submitted as one digital TIFF (tagged image le format) copy and one digital LAS (log ASCII) formatted copy, or a format approved by the director

. In addition, operators shall le two copies of drill stem test reports and charts, formation water analyses, core analyses, geologic reports, and noninterpretive lithologic logs or sample descriptions if compiled by the operator

. 4/2012 40All information furnished to the directoron new permits, exceptthe operator name, well name, location, spacing or drilling unit description, spud date, rig contractor, central tank battery number, and any production runs, shall be kept condential for not more than six months if requested by the operator in writing. The six-month period shall commence on the date the well is completed or the date the written request is received, whichever is earlier

. If the written request accompanies the application for permitto drill or is led after permitting but priorto spudding, the six-month period shall commence on the date the well is spudded. The director may release such condential completion and production data to health care professionals, emergency responders, and state, federal, or tribal environmental and public health regulators if the director deems it necessary to protect the public’s health, safety, and welfare. All informationfurnishedtothedirectoron recompletionsorreentries, except the operator name, well name, location, spacing or drilling unit description, spud date, rig contractor, and anyproduction runs, shall be keptcondential fornotmore than six months if requested bythe operator in writing. The six-month period shall commence on the date the well is completed or the date the well was approved for recompletion or reentry, whichever is earlier

. Any information furnished to the director priorto approval ofthe recompletion or reentry shall remain public. Approval mustbeobtained on asundrynotice (form4)fromthedirectorprior to perforating or recompleting a well in a pool otherthan the pool in which the well is currently permitted. After the completion of any remedial work, or attempted remedial work such as plugging back or drilling deeper, acidizing, shooting, formation fracturing, squeezing operations, setting liner, perforating, reperforating, or other similar operations not specically covered herein, a report on the operation shall be led on a sundry notice (form 4) with the director

. The report shall present a detailed accountofall workdone and the date ofsuch work; the daily production ofoil, gas, and water both priorto and afterthe operation; the shots perfoot, size, and depth ofperforations; the quantity ofsand, crude, chemical, orother materials employed in the operation; and any other pertinent information oroperations which af fectthe original status ofthe well and are not specically covered herein. Upon the installation of pumping equipment on a owing well, or change in typeofpumping equipmentdesigned to increase productivityin awell, theoperator shall submit a sundry notice (form 4) ofsuch installation. The notice shall include all pertinent information on the pump and the operation thereof including the date ofsuch installation, and the daily production ofthe well priorto and afterthe pump has been installed. All forms, reports, logs, and other information required by this section shall be submitted within thirty days after the completion of such work, although a

41 4/2012completion report shall be led immediately after the completion or recompletion ofa well in a pool or reservoir notthen covered by an orderofthe commission. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1990; May 1, 1992; May 1, 1994; July 1, 1996; September 1, 2000; July 1, 2002; January 1, 2006; January 1, 2008; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-32. Stratigraphic**  **test and**  **core holes.**  Stratigraphic test and core holes shall be permitted the same as oil and gas wells, although no setback from a drilling unit shall be required. **History:** Amended ef fective April 30, 1981; January 1, 1983; July 1, 2002. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-33. Notice**  **of intention**  **to plug**  **well.** The operator or the operator’s agent shall le a notice of intention (form 4) to plug with the director, and obtain the approval ofthe director, priorto the commencement of plugging or plug-back operations. The notice shall state the name and location ofthe well, the name ofthe operator, and the method of plugging, which must include a detailed statement of proposed work. In the case of a recently completed test well that has not had production casing in the hole, the operator may commence plugging by giving reasonable notice to, and securing verbal approval of, the director as to the method of plugging, and the time plugging operations are to begin. Within thirty days after the plugging of any well has been accomplished, the owner or operator thereof shall le a plugging record (form 7), and, if requested, a copy of the cementer’s trip ticket orjob receipt, with the director setting forth in detail the method used in plugging the well. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; January 1, 2006. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-34. Method**  **of plugging.**  All wells shall be plugged in a manner which will conne permanently all oil, gas, and water in the separate strata originally containing them. This operation shall be accomplished by the use of mud-laden uid, cement, and plugs, used singly or in combination as may be approved bythe director

. All casing strings shall be cutof fat leastthreefeet [91.44 centimeters] below the nal surface contour, and a cap shall be welded thereon. Core or stratigraphic test holes drilled to or below sands containing freshwater

4/2012 42shall be plugged in accordance with the applicable provisions recited above. After plugging, the site must be reclaimed pursuant to section 43-02-03-19. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1990; May 1, 1992; July 1, 2002. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-34.1. Reclamation**  **of surface.**  1. Within a reasonable time, but not more than one year, after a well is plugged, or ifa permit expires, has been canceled or revoked, the well site, access road, and other associated facilities constructed for the well shall be reclaimed as closely as practicable to original condition. Prior to site reclamation, the operator or the operator’s agent shall le a sundry notice (form 4) with the director and obtain approval of a reclamation plan. The operator or operator’s agent shall provide a copy of the proposed reclamation plan to the surface owner at least ten days prior to commencing the work unless waived by the surface owner

. V erbal approval to reclaim the site may be given. The notice shall include:

a. The name and address ofthe reclamation contractor; b. The name and address ofthe surface owner and the date when a copyofthe proposed reclamation plan was provided tothe surface owner;

c. A description ofthe proposed work, including topsoil redistribution and reclamation plans for the access road and other associated facilities; and d. Reseeding plans, if applicable. The commission will mail a copy ofthe approved notice to the surface owner

. All equipment, waste, and debris shall be removed from the site. Flow lines shall be purged in a manner approved by the director

. Flow lines shall be removed ifburied lessthanthreefeet[91.44centimeters] below nal contour

. 2. Gravel or other surfacing material shall be removed, stabilized soil shall be remediated, and the well site, access road, and other associated facilities constructed forthe well shall be reshaped as near as practicable to original contour

. 3. The stockpiled topsoil shall be evenly distributed over the disturbed area and, where applicable, the area revegetated with native species 43 4/2012or according to the reasonable specications of the appropriate government land manager or surface owner

. 4. Within thirty days after completing any reclamation, the operator shall le a sundry notice with the director reporting the work performed. 5. The director, with the consent of the appropriate government land manager or surface owner, may waive the requirement of reclamation ofthe site and access road after a well is plugged. **History:** Ef fective April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-35. Conversion**  **of mineral**  **wells to**  **freshwater wells.**  Any person desiring to converta mineral well to afreshwaterwell, as provided by North Dakota Century Code section 61-01-27, shall le an application for approval with the commission. The application must include, but is not limited to, the following: 1. Ifthe well is to be used forotherthan individual domestic and livestock use, a conditional water permit issued bythe state watercommission. 2. An af davit bythe person desiring to obtain approval forthe conversion stating that such person has the authority and assumes all liability for the use and plugging ofthe proposed freshwaterwell. 3. The procedurewhich will befollowed in converting the mineral well to a freshwater well. 4. If the well is not currently plugged and abandoned, an af davit must be executed by the operator of the well indicating that the parties responsible for plugging the mineral well have no objection to the conversion ofthe mineral well to a freshwaterwell. If the commission, after notice and hearing, determines that a mineral well may safely be used as a freshwaterwell, the commission may approve the conversion. **History:** Amended ef fective April 30, 1981; January 1, 1983; September 1, 1987; July 1, 2002. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-36. Liability** 

**.** The owner and operator of any well, core hole, or stratigraphic test hole, whether cased or uncased, shall be liable and responsible

4/2012 44for the plugging and site reclamation thereof in accordance with the rules and regulations ofthe commission. **History:** Amended ef fective January 1, 1983; May 1, 1994. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-37. Slush**  **pits.** Repealed ef fective January 1, 1983. **43-02-03-38. Preservation**  **of cores**  **and samples.**  Repealed ef fective January 1, 1983. **43-02-03-38.1. Preservation**  **of cores**  **and samples.**  Sample cuttings of formations, taken at regular intervals in all wells drilled for oil or gas or geologic information in North Dakota, shall be washed and packaged in standard sample envelopes which in turn shall be placed in proper order in a standard sample box; carefullyidentied astooperator, well name, location, depthofsample; andshall be sentfree ofcost to the state geologistwithin thirty days after completion ofdrilling operations. The operator of any well drilled for oil or gas in North Dakota, during the drilling oforimmediatelyfollowing the completion ofanywell, shall inform the state geologist or the geologist’s representative of all intervals that are to be cored, or have been cored. All cores taken shall be preserved and forwarded to the state geologist, free of cost, within ninety days after completion of drilling operations, unless specicallyexempted bythe state geologist. Ifan exemption is granted, the operatorshall advise the state geologist ofthe nal disposition ofthe core. This section does not prohibit the operatorfrom taking such samples ofthe core as the operator may desire for identication and testing. The operator shall furnish the state geologistwith the results of identication and testing procedures. **History:** Ef fective October 1, 1990; amended ef fective January 1, 2006. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-39. Limiting**  **gas-oil ratio.**  In the event the commission has not seta limiting gas-oil ratiofora particular pool, the operatorofanywell in such pool whose gas-oil ratio exceeds two thousand shall demonstrate to the director that production from such well should not be restricted pending a hearing before the commission toestablish a limiting gas-oil ratio. Thedirectormayrestrictproduction of any well with a gas-oil ratio exceeding two thousand, until the commission can determine that restrictions are necessary to conserve reservoir energy

. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; January 1, 2006. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04

45 4/2012**43-02-03-39.1. Oil**  **production limitation.**  In the eventthe commission has notestablished spacing and specialeld rulesfora particularoil pool, oil production from any well completed therein shall be a maximum oftwo thousand barrels per day until the commission issues a decision after hearing. The director shall have the authorityto waive production limitations forgood cause, and forspecial tests. **History:** Ef fective July 1, 1996. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-40. Gas-oil**  **ratio test.**  Each operatorshall take agas-oil ratiotest within thirty days following the completion or recompletion ofan oil well. Each test shall be conducted using standard industry practices unless otherwise specied by the director

. The initial gas-oil ratio must be reported on the well completion or recompletion report (form 6). After the discovery of a new pool, each operator shall make additional gas-oil ratio tests as directed by the director or provided for in eld rules. During tests each well shall be produced ata maximum ef cient rate. The director may shut in any well for failure to make such test until such time as a satisfactory test can be made, or satisfactory explanation given. The results of all gas-oil ratio tests shall be submitted to the director on form 9, which shall be accompanied by a statement that the data on form 9 is true and correct. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-41. Subsurface**  **pressure tests.**  The operator shall make a subsurface pressure test on the discovery well of any new pool hereafter discovered and shall reportthe resultsthereoftothe directorwithin thirtydays after the completion of such discovery well. Drill stem test pressures are acceptable. Afterthe discovery ofa new pool, each operatorshall make additional subsurface pressure tests as directed by the director or provided for in eld rules. All tests shall be made by a person qualied by both training and experience to make such tests and with an approved subsurface pressure instrument. All wells shall remain completely shut in for at least forty-eight hours prior to the test. The subsurface determination shall be obtained as close as possible to the midpoint of the productive interval of the reservoir

. The report of the reservoir pressure test shall be led on form 9a. The director may shut in any well for failure to make such test as herein abovedescribed untilsuchtimeasasatisfactorytesthas been madeorsatisfactory explanation given. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04

4/2012 46**43-02-03-42. Commingling**  **of oil**  **from pools.**  Except as directed by the commission after hearing, each pool shall be produced as a single common reservoir without commingling in the well bore ofuids from dif ferent pools. After uids from dif ferent pools have been brought to surface, such uids may be commingled provided that the amount of production from each pool is determined by a method approved by the director

. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-43. Control**  **of multiply**  **completed wells.**  Repealed ef fective January 1, 1983. **43-02-03-44. Metered**  **casinghead gas.**  All casinghead gas produced shall be reported monthlyto the director in units ofone thousand cubicfeet [28.32 cubic meters] computed at a pressure of fourteen and seventy-three hundredths pounds persquare inch absolute [1034.19 grams persquare centimeter] ata base temperature ofsixty degrees Fahrenheit [15.56 degrees Celsius]. Associated gas production may not be transported from a well premises or central production facility until its volume has been determined through the use ofproperly calibrated measurementequipment. All measurementequipmentand volumedeterminations must conform to American gas association standards. The operatorofa well shall notify the director ofthe connection date to a gas gathering system, the metering equipment, transporter, and purchaser of the gas. Any gas produced and used on lease for fuel purposes or ared must be estimated and reported on a gas production report (form 5b) in accordance with section 43-02-03-52.1. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; July 1, 1996; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-45. V**  **ented casinghead**  **gas.** Pending arrangements for disposition for some useful purpose, all vented casinghead gas shall be burned. Each are shall be equipped with an automatic ignitor or a continuous burning pilot, unless waived by the director for good reason. The estimated volume of gas used and ared shall be reported to the director on a gas production report (form 5b) on or before the fth day ofthe second month succeeding that in which gas is produced. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1990; May 1, 1992; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-46. Use**  **of vacuum**  **pumps.** Repealed ef fective January 1, 1983.

47 4/2012**43-02-03-47. Produced**  **water**

**.** Monthly water production from each well must be determined through the use of properly calibrated meter measurements, tank measurements, or an alternate measurement method approved by the director

. This includes allocating water production back to individual wells on a monthly basis, provided the method of volume determination and allocation procedure results in reasonably accurate production volumes. Operators shall report monthly to the director the amount of water produced by each well on form 5. The reports must be led on or before the rst day of the second month following that in which production occurred. **History:** Amended ef fective January 1, 1983; May 1, 1992; May 1, 1994; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-48. Measurement**  **of oil.**  Oil production may not be transported from a well premises or central production facility until its volume has been determined through the use of properly calibrated meter measurements or tank measurements. All meter and tank measurements, and volume determinations must conform to American petroleum institute standards and be corrected to a base temperature ofsixty degrees Fahrenheit [15.56 degrees Celsius]. **History:** Amendedef fectiveApril30, 1981; March 1, 1982; January 1, 1983; May 1, 1992; May 1, 1994; July 1, 1996. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-48.1. Central**  **production facility** **- Commingling**  **of production.**  1. The directorshall havethe authorityto approve requeststo consolidate production equipment at a central location. 2. Commingling of production from two or more wells in a central production facility is prohibited unless approved by the director

. There are two types of central production facilities in which production from two or more wells is commingled that may be approved bythe director

.
a. A central production facility in which all production going into the facilityhascommon ownership (working interests, royaltyinterests, and overriding royalties). b. A central production facility in which production going into the facility has diverse ownership. 3. Thecomminglingofproduction inacentral productionfacilityfromtwoor morewells having common ownership may be approved bythe director provided the production from each well can be accurately determined at reasonable intervals. Commingling of production in a central production facility from two or more wells having diverse ownership 4/2012 48may be approved by the director provided the production from each well is accurately metered prior to commingling. Commingling of production in a central production facilityfrom two ormorewells having diverse ownership that is not metered prior to commingling may only be approved by the commission after notice and hearing.

a. Common ownership central production facility

. The application for permission to commingle oil and gas in a central production facility with common ownership must be submitted on a sundry notice (form 4) and shall include the following: (1) A plat or map showing thereon the location of the central facility and the name, well le number, and location of each well and ow lines from each well that will produce into the facility

. (2) A schematic drawing of the facility which diagrams the testing, treating, routing, and transferring of production. All pertinent items such as treaters, tanks, ow lines, valves, meters, recycle pumps, etc., should be shown. (3) An af davit executed by a person who has knowledge as to the state oftitle indicating ownership is common. (4) An explanation of the procedures or method to be used to determine, accurately, individual well production at periodic intervals. Such procedures or method shall be performed at least once every three months. A copy ofall tests are to be led with the directoron form 11 within thirty days afterthe tests are completed. b. Diverse ownership central production facility

. The application for permission to commingle oil and gas in a central production facility having diverse ownership must be submitted on a sundry notice (form 4) and shall include the following: (1) A plat or map showing thereon the location of the central facility and the name, well le number, and location of each well, and ow lines from each well that will produce into the facility

. (2) A schematic drawing of the facility which diagrams the testing, treating, routing, and transferring of production. All pertinent items such as treaters, tanks, ow lines, valves, meters, recycle pumps, etc., should be shown. (3) The name ofthe manufacturer, size, and type ofmetersto be used. The meters must be proved at least once every three 49 4/2012months and the results reported to the director within thirty days following the completion ofthe test. (4) An explanation of the procedures or method to be used to determine, accurately, individual well production at periodic intervals. Such procedures or method shall be performed monthly

. A copy ofall tests are to be led with the directoron form 11 within thirty days afterthe tests are completed. 4. Any changes to a previously approved central production facility must be reported on a sundry notice (form 4) and approved bythe director

. **History:** Ef fective May 1, 1992; amended ef fective September 1, 2000; May 1, 2004. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-49. Oil**  **production equipment,**  **dikes, and**  **seals.** Storage of oil in underground or partially buried tanks or containers is prohibited. Surface oil tanks and production equipment must be devoid of leaks and in good condition. Unused tanks and production equipment must be removed from the site or placed into service, within a reasonable time period, not to exceed one year

. Dikes must be erected and maintained around oil tanks atany production facility builtorrebuilt on or after July 1, 2000. Dikes must be erected around oil tanks at any new production facility within thirty days after the well has been completed. Dikes must be erected and maintained around oil tanks at production facilities built priorto July 1, 2000, when deemed necessary by the director

. Dikes as well as the base material under the dikes and within the diked area must be constructed of suf ciently impermeable material to provide emergencycontainment. Dikes must be ofsuf cientdimension to contain the total capacity of the largest tank plus one day’s uid production. The required capacity of the dike may be lowered by the director if the necessity therefor can be demonstrated to the director’s satisfaction. Numbered metal security seals shall be properly utilized on all oil access valves and access points to secure the tank or battery oftanks. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; September 1, 2000; July 1, 2002; May 1, 2004; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-50. T**  **ank cleaning**  **permit.** No tank bottom waste shall be removed from any tank used for the storage or sale of crude oil without prior approval by the director

. V erbal approval may be given. Prior approval to remove

4/2012 50tank bottom waste from tanks not used for the storage or sale of crude oil is not required. Within thirty days ofthe removal ofthe tank bottom waste ofany tank used for the storage or sale of crude oil, the owner or operator shall submit a report (form 23) showing an accurate gauge ofthe contents ofthe tank and the amount of merchantable oil determinable from a representative sample ofthe tank bottom bythestandard centrifugal testas prescribed bytheAmerican petroleum institute’s code for measuring, sampling, and testing crude oil. Within thirtydays ofthe removal ofthe tank bottom waste ofany permanent tanknotused forthestorageorsaleofcrudeoil, theowneroroperatorshall submit a sundry notice (form 4) detailing the cleaning operation. All tank bottom waste must be disposed of in a manner authorized by the director and in accordance with all applicable local, state, and federal laws and regulations. Nothing contained in this section shall apply to reclaiming of pipeline break oil or the treating of tank bottoms at a pipeline station, crude oil storage terminal, or renery or to the treating by a gasoline plant operator ofoil and other catchings collected in traps and drips in the gas gathering lines connected to gasoline plants and in scrubbers at such plants. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; May 1, 1994; September 1, 2000; May 1, 2004. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-51. T** **reating plant.**  Before construction of a treating plant and upon written application for a treating plant permit stating in detail the location, type, capacity ofthe plant contemplated, method of processing proposed, and the plan ofoperation for all plant waste, the commission shall set such application for hearing to determine whether the proposed plant and method of processing will actually and ef ciently process, treat, and reclaim tank bottom emulsion and other wasteoils, andwhetherthere is needforsuch a plant. Theoperatorofanyportable treating plant shall notifythe directoras to all changes in location ofsaid plant. No treating plant shall operate except by order of the commission. The disposition of all products and waste must be reported monthly on form 5p. Upon approval of a treating plant and before construction begins, the permittee shall le with the commission asuretybond orcash bond conditioned upon compliancewith all laws, rules and regulations, and orders of the commission. The bond amount shall be specied in the commission orderauthorizing the treating plantand shall be based upon the location, type, and capacity ofthe plant, processing method, and plan of operationforall plantwasteapproved inthecommission orderand shall be payable

51 4/2012to the industrial commission ofNorth Dakota. In no case shall the bond amount be set lower than fty thousand dollars. **History:** Amended ef fective January 1, 1983; May 1, 1990; May 1, 1992; September 1, 2000; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-52. Report**  **of oil**  **production.** The operatorofeach well in every pool shall, on or before the rst day of the second month succeeding the month in which production occurs, le with the director the amount of production made by each such well upon form 5 or approved computer sheets no larger than eight and one-half by eleven inches [21.59 by 27.94 centimeters]. The report shall be signed by both the person responsibleforthe reportand the person witnessing the signature. The printed name and title of both the person signing the report and the person witnessing the signature shall be included. Wells for which reports of production are not received bythe close ofbusiness on said rst day ofthe month may be shut in for a period not to exceed thirty days. The director shall notify, by certied mail, the operatorand authorized transporterofthe shut-in period forsuch wells. Any oil produced during such shut-in period shall be deemed illegal oil and subject to the provisions of North Dakota Century Code section 38-08-15. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; December 1, 1997; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-52.1. Report**  **of gas**  **produced in**  **association with**  **oil.** The operator of each well in every pool shall, on or before the fth day of the second month succeeding the month in which production occurs, le with the director the amount of gas produced by each such well upon form 5b or approved computer sheets no larger than eight and one-half by eleven inches [21.59 by 27.94 centimeters]. The report shall be signed by both the person responsible for the report and the person witnessing the signature. The printed name and title ofboth the person signing the report and the person witnessing the signature shall be included. Wells for which reports of production are not received by the close of business on said fth day ofthe month may be shut in for a period not to exceed thirty days. The director shall notify, by certied mail, the operator and authorized transporter of the shut-in period for such wells. Any gas produced during such shut-in period must be deemed illegal gas and subject to the provisions of North Dakota Century Code section 38-08-15. **History:** Ef fective May 1, 1992; amended ef fective December 1, 1997; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-53. Saltwater**  **handling facilities.** 

4/2012 521. All saltwater liquids or brines produced with oil and natural gas shall be processed, stored, and disposed of without pollution of freshwater supplies. 2. Underground injection of saltwater liquids and brines shall be in accordance with chapter 43-02-05. 3. Surface facilities are acceptable provided that:

a. They are devoid of leaks and constructed of materials resistant to the ef fects of produced saltwater liquids, brines, or chemicals that may be contained therein. The above materials requirement may bewaived bythe directorfortanks presently in service and in good condition. Unusedtanksand injection equipmentmustbe removed fromthesiteorplaced intoservice, within a reasonabletime period, not to exceed one year

. b. Dikes must be erected and maintained around saltwater tanks at any saltwater handling facility built or rebuilt on or after July 1, 2000. Dikes must be erected around saltwater tanks at any new facility within thirty days after the well has been completed. Dikes must be erected and maintained around saltwater tanks at saltwater handling facilities built prior to July 1, 2000, when deemed necessary by the director

. Dikes as well as the base material under the dikes and within the diked area must be constructed of suf ciently impermeable material to provide emergency containment. Dikes must be ofsuf cient dimension to contain the total capacity of the largest tank plus one day’s uid production. The required capacity of the dike may be lowered by the director if the necessity therefor can be demonstrated to the director’s satisfaction. Discharged saltwater liquids or brines must be properly removed and may not be allowed to remain standing within or outside of any diked areas. 4. The operator shall take steps to minimize the amount of solids stored at the facility

. 5. Any salable crude oil recovered from a saltwater handling facility shall be reported on a form 5 SWD. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; September 1, 2000; July 1, 2002; May 1, 2004; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-54. Investigative**  **powers.** Upon receipt of a written complaint from any surface owner or lessee, royalty owner, mineral owner, local, state, or federal of cial, alleging a violation ofthe oil and gas conservation statutes or any rule, regulation, or order ofthe commission, the director shall within a reasonable 53 4/2012time reply in writing to the person who submitted the complaint stating that an investigation of such complaint will be made or the reason such investigation will not be made. The person who submitted the complaint mayappeal the decision of the directorto the commission. The director may also conduct such investigations on the director’s own initiative or at the direction ofthe commission. If, after such investigation, the director af rms that cause for complaint exists, the directorshall reportthe results ofthe investigation to the person who submitted the complaint, if any, tothe personwhowasthesubjectofthecomplaintandtothecommission. The commission shall institute such legal proceedings as, in its discretion, it believes are necessary to enjoin further violations. **History:** Amended ef fectiveApril 30, 1981; January 1, 1983; May 1, 1992; April 1, 2012. **General Authority:**  NDCC 38-08-04, 38-08-12 **Law Implemented:**  NDCC 38-08-04, 38-08-12 **43-02-03-55. Abandonment**  **of wells**  **- Suspension**  **of drilling.**  1. The removal of production equipment or the failure to produce oil or gas, or the removal of production equipment or the failure to produce water from a source well, for one year constitutes abandonment of the well. The removal of injection equipment or the failure to use an injection well for one year constitutes abandonment of the well. The failure to plug a stratigraphic test hole within one year of reaching total depth constitutes abandonment of the well. An abandoned well must be plugged and its site must be reclaimed pursuant to sections 43-02-03-34 and 43-02-03-34.1. 2. Thedirectormaywaiveforoneyearthe requirementto plug and reclaim an abandoned well by giving the well temporarily abandoned status. This status may only be given to wells that are to be used for purposes related to the production of oil and gas. If a well is given temporarily abandoned status, thewell’s perforations must be isolated, the integrity of its casing must be proven, and its casing must be sealed at the surface, all in a manner approved by the director

. The director may extend a well’s temporarily abandoned status beyond one year

. A fee ofone hundred dollarsshall besubmitted foreach application toextend the temporary abandonment status ofany well. 3. In addition tothewaiverin subsection 2, thedirectormayalsowaivethe duty to plug and reclaim an abandoned well for any other good cause found bythedirector

. Ifthedirectorexercisesthisdiscretion, thedirector shall set a date or circumstance upon which the waiver expires. 4. The director may approve suspension of the drilling of a well. If suspension is approved, a plug must be placed at the top of the casing to prevent any foreign matter from getting into the well. When drilling has been suspended for thirty days, the well, unless otherwise

4/2012 54authorized by the director, must be plugged and its site reclaimed pursuant to sections 43-02-03-34 and 43-02-03-34.1. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1990; May 1, 1992; August 1, 1999; January 1, 2008; April 1, 2010; April 1, 2012. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-56. Underground**  **disposal of**  **water**

**.** Repealed ef fective November 1, 1982. **43-02-03-57. Determination**  **of gas** **well potential.**  Afterthe completion or recompletion ofa gas well, the operator shall conduct tests to determine the daily open ow potential of the well. The test results together with an analyses of the gas shall be reported to the directorwithin thirty days aftercompletion ofthe well. Operators shall conduct either a stabilized one-point back-pressure test or a multipoint back-pressure test in accordance with the "Manual of Back-Pressure T esting ofGas Wells" published bythe interstate oil and gas compact commission unless otherwise approved by the director

. **History:** Amended ef fective January 1, 1983; May 1, 1992; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-58. Method**  **and time**  **of shut-in**  **pressure tests.**  Repealed ef fective January 1, 1983. **43-02-03-59. Production**  **from gas**  **wells to**  **be measured**  **and reported.**  Gas production may not be transported from gas well premises until its volume has been determined through the use of properly calibrated measurement equipment. All measurementequipmentand volume determinations mustconform to American gas association standards and corrected to a pressure of fourteen and seventy-three hundredths pounds per square inch absolute [1034.19 grams per square centimeter] at a base temperature of sixty degrees Fahrenheit [15.56 degrees Celsius]. Gas production reports (form 5b) shall be led with the director on or before the fth day ofthe second month succeeding that in which production occurs. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; May 1, 1994; July 1, 1996; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-60. Natural**  **gas utilization.**  Repealed ef fective January 1, 1983.

55 4/2012**43-02-03-60.1. V**  **aluation of**  **ared gas.**  The value of gas ared from an oil well in violation of North Dakota Century Code section 38-08-06.4 shall be determined by the commission after notice and hearing. **History:** Ef fective October 1, 1990; amended ef fective May 1, 1992; May 1, 1994; May 1, 2004. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-06.4 **43-02-03-60.2. Flaring**  **exemption.** The connection of a well to a natural gas gathering line is "economically infeasible" under North Dakota Century Code section 38-08-06.4, if the direct costs of connecting the well to the line and the direct costs ofoperating the facilities connecting the well to the line during the life ofthe well, are greater than the amount of money the operator is likely to receive for the gas, less production taxes and royalties, should the well be connected. In makingthiscalculation, theapplicantmayadd ten percenttotheamountofthecost ofconnecting the well and ofoperating the connection facilities used to determine whether a connection is economically infeasible. This ten percent may be added in consideration ofthe costofmoneyand otheroverhead costs thatare notgured in the direct costs ofconnecting the well and operating the connecting facilities. An applicant for an exemption under North Dakota Century Code section 38-08-06.4 must, atthe minimum, present evidence covering the following areas: 1. Basis for the gas price used to determine whether it is economically infeasible to connect the well to a natural gas gathering line; 2. Cost of connecting the well to the line and operating the facilities connecting the well to the line; 3. Current daily rate ofthe amount ofgas ared; and 4. The amount ofgas reserves and the amount ofgas available forsale. **History:** Ef fective May 1, 1994. **General Authority:**  NDCC 38-07-04 **Law Implemented:**  NDCC 38-08-06.4 **43-02-03-61. Storage**  **gas.** With the exception ofthe requirement to meter and report monthly the amount of gas injected and the amount of gas withdrawn from storage, in the absence of waste, this chapter shall not apply to gas being injected into or removed from storage. **History:** Amended ef fective January 1, 1983. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-62. Carbon**  **dioxide, coal**  **bed methane,**  **helium, and**  **nitrogen.** Insofar as is applicable, the provisions of this chapter relating to gas, gas wells,
4/2012 56and gas reservoirs shall also apply to carbon dioxide, coal bed methane, helium, nitrogen, carbon dioxide wells, coal bed methane wells, helium wells, nitrogen wells, carbon dioxide reservoirs, coal bed methane reservoirs, helium reservoirs, and nitrogen reservoirs. **History:** Amended ef fective January 1, 1983; September 1, 1987; July 1, 2002. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-63. Regulation**  **of pools.**  T o prevent waste and to protect correlative rights, when the commission nds that total production in an area signicantly exceeds the reasonable market demand and undue marketing discrimination is occurring, the commission may prorate ordistribute the allowable production among proration units upon a reasonable basis through rules, regulations, ororders pertaining to any pool orarea after notice and hearing. **History:** Amended ef fective January 1, 1983; January 1, 2008. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-64. Rate**  **of producing**  **wells.** In allocated oil and gas pools the owner or operator of any proration unit shall not produce from the unit during any proration period more oil or gas than the allowable production from such unit as shown by the proration schedule, provided that such owners oroperators shall be permitted to maintain a uniform rate ofproduction foreach unitduring the proration period. In order to maintain a uniform rate of production from the pool during any proration period, any operator may produce a total volume ofoil and gas equal to that shown on the applicable proration schedule plus ve days unit allowable, and any such overproduction may be deducted from the total allowable for the well in the second month following. Where the commission has established spacing rules in any pool, proration units shall consist of spacing units. **History:** Amendedef fectiveJanuary 1, 1983; September1, 2000; January 1, 2008; April 1, 2008. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-65. Authorization**  **for production,**  **purchase, and**  **transportation.** When necessary the commission shall hold a hearing to set proration unit allowables for the state. The commission shall consider all evidence of market demand for oil and gas, including sworn statements of individual demand as submitted by each purchaser or buyer in the state, and determine the amount to be produced from all pools. The amount so determined will be allocated among the various pools in accordance with existing regulations and in each pool in accordance with regulations governing each pool. In allocated pools, ef fective the rst day of
57 4/2012each proration period, the commission will issue a proration schedule which will authorize the production of oil and gas from the various units in strict accordance with the schedule, and the purchase and transportation of such production. Allowable forwells completed afterthe rstdayofthe proration period will become ef fective from the date of well completion. A supplementary order will be issued by the commission to the operator of a newly completed or recompleted well, and to the purchaser or transporter of the production from a newly completed or recompleted well, establishing the ef fective date of completion, the amount of production permitted during the remainder of the proration period, and the authority to purchase and transport same from said proration unit. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; July 1, 1996; January 1, 2008. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-66. Application**  **for allowable**  **on new** **oil wells.**  Nowell shall be placed on the proration schedule until a completion report (form 6) has been led with the director

. The discovery well of any pool hereafter discovered shall be allowed to produce at a maximum ef cient rate until such time as proper spacing is set for the pool, and shall produce thereafter, only pursuantto the general proration rules and regulations ofthe commission. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; September 1, 2000; January 1, 2008. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-67. Oil**  **proration.** At the beginning of each calendar month, the distribution or proration to the respective proration units shall be changed in order to take into account all new wells which have been completed and were not in the proration schedule during the previous calendar month. Where any well is completed between the rst and last day of the calendar month, its proration unit shall be assigned an allowable beginning at seven a.m., on the date ofcompletion and for the remainder ofthat calendar month. **History:** Amended ef fective January 1, 1983; January 1, 2008. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-68. Gas-oil**  **ratio limitation.**  Inallocated poolscontainingawellor wellsproducingfromareservoirwhichcontainsbothoilandgas, each proration unit shall be permitted to produce only that volume ofgas equivalent to the applicable limiting gas-oil ratio multiplied bythe proration unitoil allowable currently assigned to the pool. In the event the commission has not set a gas-oil ratio limit for a particular oil pool, the limiting gas-oil ratio shall be two thousand cubic feet [56.63 cubic meters] ofgas for each barrel ofoil produced.
4/2012 58A gas-oil limit shall be placed on all allocated oil pools, and all proration units having a gas-oil ratio exceeding the limitforthe pool shall be adjusted unless previously exempted by the commission after hearing, in accordance with the following formula: 1. Any proration unit which, on the basis ofthe latest of cial gas-oil ratio test has a gas-oil ratio in excess of the limiting gas-oil ratio for the pool in which it is located, shall be permitted to produce that number of barrels of oil which shall be determined by multiplying the proration unitallowablebythefraction, thenumeratorofwhichshall bethelimiting gas-oil ratioforthepoolandthedenominatorofwhichshall betheof cial gas-oil ratio test ofthe well. 2. Any unit containing a well or wells producing from a reservoir which contains both oil and gasshall be permitted to produceonlythatvolume ofgas equivalenttothe applicable limiting gas-oil ratio multiplied bythe proration unit allowable currently assigned to the pool. All proration units to which gas-oil ratio adjustments are applied shall be so indicated inthe prorationschedulewith adjusted allowablesstated. Theadjustment shall be made ef fective on the rst day of the month following that in which the gas-oil ratio tests were reported for the pool, as set forth in the special eld rules applicable to the pool. In cases of new pools the limiting gas-oil ratio shall be two thousand cubic feet [56.63 cubic meters] per barrel until such time as changed bythe commission after a hearing. After notice and hearing, the commission shall determine or redetermine, the specic gas-oil ratio limit which is applicable to a particular allocated oil pool. **History:** Amended ef fective January 1, 1983; January 1, 2008. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-69. Allocation**  **of gas**  **production.** When the commission determines that allocation ofgas production in a designated gas pool is necessary to preventwaste, and to protectcorrelative rights, the commission, afternotice and hearing, shall considerthe nominations ofpurchasersfrom thatgas pool and other relevant data, and shall xthe allowable production ofthat pool, and shall allocate production among the proration units in the pool delivering to a gas transportation facility upon a reasonable basis. The commission shall include in the proration schedule of such pool any proration unit which it nds is being unreasonably discriminated against through

59 4/2012denial of access to a gas transportation facility which is reasonably capable of handling the type ofgas producible from such proration unit. **History:** Amended ef fective January 1, 1983; January 1, 2008. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-70. Gas**  **proration period.**  The gas proration period shall be set by order ofthe commission. **History:** Amended ef fective January 1, 1983. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-71. Adjustment**  **of gas**  **allowables.** When the actual market demand from any allocated gas pool during a proration period is more than or less than the allowable set by the commission for the pool for the period, the commission shall adjust the gas proration unit allowables for the pool for the next proration period sothateach gas proration unitshall havea reasonableopportunity to produce its fairshare ofthe gas production from the pool in a mannerthat shall protect correlative rights. **History:** Amended ef fective January 1, 1983. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-72. Gas**  **proration units.**  Before issuing a proration schedule for an allocated gas pool, the commission, after notice and hearing, shall x the gas proration unit for that pool. **General Authority:**  NDCC 38-08-04, 38-08-06 **Law Implemented:**  NDCC 38-08-04, 38-08-06 **43-02-03-73. Permit** **for injection**  **of gas,**  **air ,**  **or water** 

**.** Repealed ef fective November 1, 1982. **43-02-03-74. Casing**  **and cementing**  **of injection**  **wells.** Repealed ef fective November 1, 1982. **43-02-03-75. Notice** **of commencement** **and discontinuance** **of injection**  **operations.** Repealed ef fective November 1, 1982. **43-02-03-76. Records.**  Repealed ef fective November 1, 1982. **43-02-03-77. Application**  **for unitized**  **management under**  **commission order** 

**.** Any plan of unitized management or any injection into a reservoir for the purpose of maintaining reservoir pressure or for enhanced recovery operations shall be permitted only by order of the commission after notice and hearing. The

4/2012 60application for an order shall include a complete statement of all matters required by North Dakota Century Code section 38-08-09 et seq. The application shall be submitted to the commission, in duplicate, at least forty-ve days prior to the date requested for such hearings and shall be accompanied byall engineering, geological, and othertechnical exhibitswhich will be introduced at the hearing. In addition, the application shall set forth that all the provisions of North Dakota Century Code section 38-08-09.5 have been complied with. **History:** Amended ef fective November 1, 1982; January 1, 1983; May 1, 1992. **General Authority:**  NDCC 38-08-09 **Law Implemented:**  NDCC 38-08-09 **43-02-03-78. Illegal**  **sale prohibited.**  Repealed ef fective January 1, 1983. **43-02-03-79. Purchase**  **of liquids**  **from gas**  **wells.** Provided that a supplemental order is issued authorizing such production on the proration schedule, any common purchaser is authorized to purchase one hundred percent ofthe amountofassociated crude oil orcondensate produced and recovered from a gas proration unit. **History:** Amended ef fective January 1, 1983. **General Authority:**  NDCC 38-08-06 **Law Implemented:**  NDCC 38-08-06 **43-02-03-80. Reports**  **of purchasers**  **and transporters**  **of crude**  **oil.** On orbeforetherstdayofthe second month succeeding that in which oil is removed, purchasers and transporters, including truckers, shall le with the director the appropriate monthly reporting forms. The purchaser shall le on form 10 and the transporter on form 10a the amount of all crude oil removed and purchased by them from each well or central production facility during the reported month. The transporter shall report the disposition of such crude oil on form 10b. All meter and tank measurements, and volume determinations of crude oil removed and purchased from a well or central production facility must conform to American petroleum institute standards and corrected to a basetemperature ofsixtydegrees Fahrenheit [15.56 degrees Celsius] and fourteen and seventy-three hundredths pounds persquare inch absolute [1034.19 grams persquare centimeter]. Priorto removing anyoilfrom awell orcentral productionfacility, purchasers and transporters shall obtain an approved copy of a producer’s authorization to purchase and transport oil from a well or central production facility (form 8) from either the producer or the director

. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1990; May 1, 1992; May 1, 1994; July 1, 1996; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04
61 4/2012**43-02-03-81. Authorization**  **to transport**  **oil from**  **a well**  **or central**  **production facility** 

**.** Before any crude oil is transported from a well or central production facility, the operator of the well or central production facility shall le with the director, and obtain the director’s approval, an authorization to purchase and transport oil from a well or central production facility (form 8). Oil transported from a well or central production facility before the authorization is obtained or if such authorization has been revoked shall be considered illegal oil. Thedirectormayrevoketheauthorization to purchaseand transportoil from a well orcentral production facilityforfailure to complywith any rule, regulation, or order of the commission. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; July 1, 1996; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-81.1. Reports**  **of purchases**  **for resale**  **and transporting**  **of dry**  **gas.** Transporters of and purchasers for the resale of dry gas shall le a report (form 8a)with the directorshowing the amountofgastaken from each plantorwell during the monthly reporting period. All gas shall be reported monthly to the director in one thousand cubic feet [28.32 cubic meters] computed at a pressure of fourteen and seventy-three hundredths pounds per square inch [1034.19 grams per square centimeter] absolute at a base temperature of sixty degrees Fahrenheit [15.56 degrees Celsius]. **History:** Ef fective January 1, 1983; amended ef fective May 1, 1992; July 1, 1996. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-82. Renery**  **reports.** Each renerofoilwithin North Dakotashall furnish foreach calendar month a report (form 13) containing information and data respecting crude oil and products involved in such rener’s operations during each month. The report for each month shall be prepared and led on or before the fteenth ofthe next succeeding month with the director

. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992; September 1, 2000. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-83. Gas**  **processing plant**  **reports.** Each operator of a gas processing plant, cycling plant, or any other plant at which gas processing, gasoline, butane, propane, condensate, kerosene, oil, or other products are

4/2012 62extracted from gas shall furnish to the director a report containing the amount of gas received from each lease orwell on form 12a. Crude oil recovered shall be reported to the director, on form 5 on or before the close ofbusiness on therstdayofthe second month succeeding that in which oil is removed. Other operations shall be reported to the director, on form 12 and 12a, on or before the fth day of the second month following that in which gas is processed. **History:** Amended ef fective April 30, 1981; January 1, 1983; May 1, 1992. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-84. Additional**  **information may**  **be required.**  This chaptershall not be taken or construed to limit or restrict the authority of the commission to require the furnishing ofsuch additional reports, data, orother information relative to production, transportation, storing, rening, processing, or handling ofcrude oil, gas, or products as may appear to be necessary or desirable, either generally or specically, for the prevention of waste, protection of correlative rights, and the conservation of natural resources. **History:** Amended ef fective January 1, 1983. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-85. Books**  **and records**  **to be**  **kept to**  **substantiate reports.**  All producers, transporters, storers, reners, gasoline or extraction plant operators, and initial purchasers within North Dakota shall make and keep appropriate books and records fora period not less than sixyears, covering theiroperations in North Dakotafromwhich they may be ableto make and substantiatethe reports required by this chapter

. **History:** Amended ef fective January 1, 1983; July 1, 2002. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-86. Public**  **hearing required.**  Repealed ef fective January 1, 1983. **43-02-03-87. Institute**  **proceedings.** Repealed ef fective January 1, 1983. **43-02-03-88. Application**  **for hearing.**  In any proceeding instituted upon application, the application shall be signed by the applicant or by the applicant’s attorney

. An application shall state (1) the name and general description of the common source or sources of supply af fected by the order, rule, or regulation sought if any, unless same is intended to apply to and af fect the entire state, in which event the application shall so state, and such statement shall constitute

63 4/2012suf cient description; and (2) briey the general nature of the order, rule, or regulation sought in the proceedings. **History:** Amended ef fective January 1, 1983. **General Authority:**  NDCC 38-08-11 **Law Implemented:**  NDCC 38-08-11 **43-02-03-88.1. Special**  **procedures for**  **increased density**  **wells, pooling,**  **aring exemption,**  **underground injection,**  **commingling, converting**  **mineral wells**  **to freshwater**  **wells, and**  **central tank**  **battery or**  **central production**  **facilities applications.**  1. Applications to amend eld rules to allow additional wells on existing spacing units, for pooling under North Dakota Century Code section 38-08-08, for a aring exemption under North Dakota Century Code section 38-08-06.4 and section 43-02-03-60.2, for underground injection under chapter43-02-05, for commingling in one well bore the uidsfrom two ormore pools undersection 43-02-03-42, forconverting a mineral well to a freshwater well under section 43-02-03-35, and for establishing central tank batteries or central production facilities under section 43-02-03-48.1, must be signed by the applicant or the applicant’s representative. The application must contain or refer to attachments that contain all the information required by law as well as the information the applicant wants the commission to consider in deciding whether to grant the application. The application must designate an employee or representative ofthe applicant to whom the commission can direct inquiries regarding the application. 2. The applications referred to in subsection 1 will be advertised and scheduled for hearing as are all other applications received by the commission. The applicant, however, unless required by the director, need not appear at the hearing scheduled to consider the application, although additional evidence may be submitted prior to the hearing. Any interested party may appearat the hearing to oppose or comment on the application. Any interested party may also submit written comments on orobjections to the application no laterthan ve p.m. on the last business day priorto the hearing date. Such submissions may be part ofthe record in the case ifallowed by the hearing examiner

. 3. Thedirectorisauthorized, on behalfofthecommission, tograntordeny the applications referred to in subsection 1. 4. In any proceeding underthis section, the applicant, atthe hearing, may supplement the record by of fering testimony and exhibits in support of the application. 5. In the eventthe applicant is not required bythe directorto appearatthe hearing and an interested party does appearto oppose the application or submits a written objection to the application, the hearing of cer
4/2012 64shall continue the hearing to a later date, keep the record open forthe submission of additional evidence, or take any other action necessary to ensure thatthe applicant, who does notappearatthe hearing as the result ofsubsection 2, is accorded due process. **History:** Ef fective May 1, 1992; amended ef fective May 1, 1994; May 1, 2004; April 1, 2012. **General Authority:**  NDCC 38-08-04, 38-08-11 **Law Implemented:**  NDCC 38-08-04, 38-08-08 **43-02-03-88.2. Hearing**  **participants by**  **telephone.** In any hearing, the commission may, at its option, allow telephonic communication of witnesses and interested parties. The procedure shall be as follows: 1. T elephonic communication of an applicant’s witness will only be considered ifawritten request is made at leasttwo business days prior to the hearing date. 2. T elephoniccommunicationofan interested partywill onlybeconsidered ifsaid party noties the applicantand the commission in writing at least three business days priortothe hearing date. Such notice shall include the subject hearing, the name and telephone number ofthe interested party, and the name and telephone number of the interested party’s attorney or representative thatwill be present at the hearing. 3. In the event an objection to any party’s telephonic communication is received, the examinermaydisallowsuch communication bytelephone and may reschedule for an in-person hearing. The commission will notify all parties whether or not the request to participate by telephone is granted or denied. 4. All parties participating by telephone shall have an attorney or representative present at the hearing who shall be responsible for actually calling said party once the case is called for hearing, for providing the commission at the time of the hearing with any documentary evidence requested to be included in the record, and for any other matters necessaryforthe partyto participate bytelephone. 5. All parties participating by telephone shall le an af davit verifying the identity of such party

. The record of such telephonic communication shall not be considered evidence in the case unless said af davit is received by the examiner prior to an order being issued by the commission. The commission shall provide a form af davit. The commission has the discretion to refuse to consider all or any part of the information received from any party participating by telephone. 6. Forall hearings allowing communication bytelephone, the commission shall provide a hearing room equipped with a speakertelephone.

65 4/20127. The cost of telephonic communication shall be paid by the party requesting its use. **History:** Ef fective July 1, 2002; amended ef fective May 1, 2004. **General Authority:**  NDCC 38-08-11 **Law Implemented:**  NDCC 28-32-11 **43-02-03-89. Upon**  **application hearing**  **is set.**  Repealed ef fective January 1, 1983. **43-02-03-90. Hearings**  **- Complaint**  **proceedings -**  **Emergency proceedings**  **- Other**  **proceedings.** 1. Except as more specically provided in North Dakota Century Code section 38-08-11, the rules of procedure established in subsection 1 of North Dakota Century Code section 28-32-21 apply to proceedings involving a complaint and a specic-named respondent. 2. For proceedings that do not involve a complaint and a specic-named respondent the commission shall give at least fteen days’ notice (except in emergency) of the time and place of hearing thereon by one publication ofsuch notice in a newspaper ofgeneral circulation in Bismarck, North Dakota, and in a newspaper of general circulation in the county where the land af fected or some part thereof is situated, unless in some particular proceeding a longer period of time or a dif ferent method of publication is required by law, in which event such period oftime and method of publication shall prevail. The notice shall issue in the name of the commission and shall conform to the other requirements provided by law

. 3. In case an emergency is found to exist by the commission which in its judgment requires the making of a rule or order without rst having a hearing, the emergency rule or order shall have the same validity as if a hearing with respect to the same had been held after notice. The emergency rule or order permitted by this section shall remain in force no longerthanfortydaysfrom itsef fectivedate, and in anyevent, itshall expire when the rule or order made after due notice and hearing with respectto the subject matterofsuch emergency rule ororderbecomes ef fective. Any person moving for a continuance of a hearing, and who is granted a continuance, shall submit a twenty-ve dollar fee to the commission to pay the cost of republication of notice ofthe hearing. **History:** Amended ef fective March 1, 1982; January 1, 1983; May 1, 1990; May 1, 1992; May 1, 1994; July 1, 1996; July 1, 2002. **General Authority:**  NDCC 38-08-11 **Law Implemented:**  NDCC 28-32-05, 38-08-11

4/2012 66**43-02-03-90.1. Investigatory**  **hearings.** The commission may hold investigatory hearings upon the institution of a proceeding by application or by motion of the commission. Notice of the hearing must be served upon all parties personally or by certied mail at least ve days before the hearing. **History:** Ef fective May 1, 1992. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-90.2. Ofcial**  **record.** The evidence in each case heard by the commission, unless specically excluded by the hearing of cer, includes the certied directional surveys, and all oil, water, and gas production records on le with the commission. Any interested party may submit written comments on or objections to the application priorto the hearing date. Such submissions must be received no later than ve p.m. on the last business day prior to the hearing date and may be part ofthe record in the case ifallowed by the hearing examiner

. **History:** Ef fective May 1, 1992; amended ef fective April 1, 2010; April 1, 2012. **General Authority:**  NDCC 28-32-06 **Law Implemented:**  NDCC 28-32-06 **43-02-03-90.3. Petitions**  **for review**  **of recommended**  **order and**  **oral arguments**  **prohibited.** Neither petitions for review of a recommended order nor oral arguments following issuance ofa recommended orderand pending issuance of a nal order are allowed. **History:** Ef fective May 1, 1992. **General Authority:**  NDCC 28-32-13 **Law Implemented:**  NDCC 28-32-13 **43-02-03-90.4. Notice**  **of order**  **by mail.**  The commission may give notice of an order by mailing the order, and ndings and conclusions upon which it is based, to all parties by regular mail provided it les an af davit of service by mail indicating upon whom the orderwas served. **History:** Ef fective May 1, 1992. **General Authority:**  NDCC 28-32-13 **Law Implemented:**  NDCC 28-32-13 **43-02-03-90.5. Service**  **and ling.**  All pleadings, notices, written motions, requests, petitions, briefs, and correspondence to the commission or commission employee from a party (orvice versa) relating to a proceeding after its commencement, must be led with the directorand entered into the commission’s of cial record ofthe procedure provided the record is open at the time of receipt. All parties shall receive copies upon request of any or all of the evidence in the record of the proceedings. The commission may charge for the actual cost of

67 4/2012providing copies ofevidence in the record. Unless otherwise provided by law, ling shall be complete when the material is entered into the record ofthe proceeding. **History:** Ef fective May 1, 1992. **General Authority:**  NDCC 28-32-13 **Law Implemented:**  NDCC 28-32-13 **43-02-03-91. Rehearing.**  Repealed ef fective May 1, 1992. **43-02-03-92. Burden**  **of proof.**  Repealed ef fective January 1, 1983. **43-02-03-93. Designation**  **of examiners.**  The commission may by motion designate and appoint qualied individuals to serve as examiners. The commission may refer any matter or proceeding to any legally designated and appointed examiner or examiners. **History:** Amended ef fective April 30, 1981; January 1, 1983. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-94. Matters**  **to be**  **heard by**  **examiner**

**.** Repealed ef fective January 1, 1983. **43-02-03-95. Powers**  **and duties**  **of examiner** 

**.** The commission may by motion limit the powers and duties of any examiner in any particular case to such issues or to the performance of such acts as the commission deems expedient; however, subjectonlyto such limitation as may be ordered bythe commission, the examiner or examiners to whom any matter or proceeding is referred under this chapter shall have full authority to hold hearings on such matter or proceeding in accordance with and pursuant to this chapter

. The examinershall have the power to regulate all proceedings before the examinerand to perform all acts and take all measures necessaryorproperfortheef cientand orderlyconductofsuch hearing, including ruling on prehearing motions, the swearing of witnesses, receiving of testimony and exhibits of fered in evidence, subject to such objections as may be imposed, and shall cause a complete record of the proceeding to be made and retained. **History:** Amended ef fective January 1, 1983; May 1, 1990. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-96. Matters**  **heard by**  **commission.** Repealed ef fective January 1, 1983. **43-02-03-97. Examiner**  **disinterested umpire.**  Repealed ef fective January 1, 1983. **43-02-03-98. Report**  **of examiner** 

**.** Upon the conclusion of any hearing before an examiner, the examinershall promptly considerthe proceedings in such
4/2012 68hearing, and based upon the record ofsuch hearing, the examinershall prepare a report and recommendations forthe disposition ofthe matteror proceeding bythe commission. Such report and recommendations shall either be accompanied by a proposed orderorshall be in the form ofa proposed order, and shall be submitted to the commission. **History:** Amended ef fective January 1, 1983. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-99. Commission**  **order from**  **examiner hearing.**  After receipt of the report and recommendations of the examiner, the commission shall enter its order disposing ofthe matter or proceeding. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04 **43-02-03-100. Hearing**  **de novo**  **before commission.**  Repealed ef fective January 1, 1983. **43-02-03-101. Prehearing**  **motion practice.**  In a matter pending before the commission, all prehearing motions must be served by the moving party upon all parties af fected by the motion. Service must be upon a party unless a party is represented by an attorney, in which case service must be upon the attorney

. Service must be made bydelivering a copyofthe motion and all supporting papers in conformance with one of the means of service provided for in rule 5(b) of the North Dakota Rules ofCivil Procedure. Proofofservice must be made as provided in rule 4 of the North Dakota Rules of Civil Procedure or by the certicate of an attorney showing that service has been made. Proof of service must accompany theling ofa motion. Anymotionledwithoutproofofservice is notproperlybefore the commission. **History:** Ef fective May 1, 1990; amended ef fective January 1, 2006. **General Authority:**  NDCC 38-08-04 **Law Implemented:**  NDCC 38-08-04

69 4/2012